SOL PLAATJE LOCAL MUNICIPALITY · MUNICIPAL MANAGER: Mr G Akharwaray B.Proc.LLB, Certificate in Management CHIEF FINANCIAL OFFICER: Me ZL Mahloko B.Comm Hons MEMBERS OF COUNCIL: Councillor

SOL PLAATJE LOCAL MUNICIPALITY

CITY OF KIMBERLEY


ANNUAL FINANCIAL STATEMENTS

for the year ended

30 June 2017


ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

INDEX

Page

General Information 1

Declaration Accounting Officer 2

Statement of Financial Position 3

Statement of Financial Performance 4

Statement of Changes in Net Assets 5

Cash Flow Statement 6

Accounting Policies 7

Notes to the Annual Financial Statements 35

Appendices are supplementary information and do not form part of the Financial Statements and is

unaudited.

Appendix A: Schedule of External Loans 71

Appendix B: Analysis of Property, Plant and Equipment 72

Appendix C: Segmental Analysis of Property, Plant and Equipment 73

Appendix D: Segmental Statement of Financial Performance 74

Appendix E(1): Actual versus Budget (Revenue and Expenditure) 75

Appendix E(2): Actual versus Budget (Acquisition of Property, Plant and Equipment) 76

Appendix E(3): Actual versus Budget (Cash Flow) 77

Appendix F: Disclosures of Grants and subsidies in Terms of the Municipal Finance Management Act 78

Appendix G: Disclosures of Deviations from procurement policy 79

Appendix H: Appropriation Statements A1 - A7 80

EXECUTIVE MAYOR Alderman OM Matika

SPEAKER Councillor E Johnson

GRADING OF THE LOCAL AUTHORITY: Grade 5 NC091

AUDITORS: Auditor-General of South Africa

Block 1 Montrio Corporate Park

10 Oliver Road Private Bag X5013

Monument Heights

Kimberley Kimberley

8301 8300

Telephone 053-8311016

Fax 053-8326277

BANKERS: Standard Bank

Old Main Road P.O. Box 626

Kimberley Kimberley

8301 8300


Fax 053-8078173

REGISTERED OFFICE: Civic Centre

Sol Plaatje Drive Private Bag X5030

Kimberley Kimberley

8301 8300


Fax 053-8331005

MUNICIPAL MANAGER: Mr G Akharwaray B.Proc.LLB, Certificate in Management

CHIEF FINANCIAL OFFICER: Me ZL Mahloko B.Comm Hons

MEMBERS OF COUNCIL: Councillor

Ward

1 Francis BP 12 Mokgalagadi M 23 Vorster PJ

2 Visagie L 13 Wapad MR 24 Steyn SM

3 Lewis CB 14 Pieterse LHS 25 Fourie OC

4 Mpanza TH 15 Keetile WM 26 Makhamba BJ

5 Mohapi PM 16 Stout BJ 27 Hammer N

6 Setlholo DT 17 Petoro GI 28 Griqua SH

7 Kwagile PP 18 Van Wyk PR 29 Springbok B

8 Ngoma TC 19 Tshite BP 30 Kock GP

9 Monyamane GK 20 Pearce C 31 Keme BJ

10 Gomba JT 21 Van Rooyen WA 32 Lekhatlanya MJ

11 Qonga YT 22 Maditse NM 33 Sebego KM

Councillor

Proportional

1 Badenhorst EL 11 Kruger F 21 Moshweu MM

2 Beylefeld MJ 12 Liebenberg R 22 Mpampi S

3 Bishop PD 13 Louw M 23 Niemann E

4 Boshoff WJ 14 Ludick RA 24 Phiri KC

5 Boqo AN 15 Matshediso OM 25 Pholoholo IM

6 Buda HU 16 Meintjies M 26 Plaatjie OB

7 Chinkuli DS 17 Meleng LP 27 Shushu LN

8 Doyle MS 18 Miller HB 28 Steenkamp DL

9 Duba LF 19 Mokae OJ 29 Thabane MP

10 Kika SN 20 Morwe RT 30 Thulo FL


GENERAL INFORMATION

FOR THE YEAR ENDED 30 JUNE 2017

1


ANNUAL FINANCIAL STATEMENTSfor the year ended 30 June 2017

I am accountable for the preparation of these annual financial statements, which

are set out on pages 3 to 79, in terms of Section 126(1) of the Municipal Finance

Management Act and which I have signed on behalf of the Municipality.

I certify that the salaries, allowances and benefits of Councillors as disclosed in

note 30 of these annual financial statements are within the upper limits of the

framework envisaged in Section 219 of the Constitution, read with the

Remuneration of Public Officer Bearers Act and the Minister of Provincial and Local

Government’s determination in accordance with this Act.

GH Akharwaray

Municipal Manager

31 August 2017

2

Note 2016 2017 Budget

R R R

ASSETS

Current Assets 1,341,526,862 1,166,661,773 1,048,396,808

Inventory 2 31,935,661 32,656,079 37,649,409

Trade Receivables from Exchange Transactions 4 447,547,482 332,456,474 278,151,102

Trade Receivables from Non-Exchange Transactions 5 627,175,896 531,900,557 457,652,791

Cash and Cash Equivalents 6 226,561,404 259,275,698 264,037,771

Operating Lease Assets 7 - 34,999 79,578

Vat Receivable from Exchange Transactions 8 8,306,419 10,337,965 10,826,157

Non-Current Assets 1,693,862,683 1,636,368,690 1,783,898,904

Property, Plant and Equipment 9 1,482,178,119 1,423,443,623 1,580,750,066

Heritage Assets 9 8,648,295 8,648,295 6,801,944

Intangible Assets 10 3,825,728 6,299,418 3,375,382

Investment Property 11 195,886,029 196,328,319 190,750,604

Trade Receivables from Exchange Transactions 4 2,147,432 1,491,884 1,785,064

Trade Receivables from Non-Exchange Transactions 5 1,177,081 157,151 435,844

Total Assets 3,035,389,545 2,803,030,462 2,832,295,711

LIABILITIES

Current Liabilities 249,562,065 242,741,995 227,398,100

Consumer Deposits 13 29,969,181 28,820,246 26,196,245

Provisions 14 9,507,325 8,695,501 9,007,425

Payables from Exchange Transactions 15 156,772,329 161,272,255 163,651,739

Unspent Conditional Grants and Receipts 16 12,349,709 11,012,029 -

Vat Payable from Exchange Transactions 17 32,725,353 24,740,958 20,296,652

Current Portion of Long-term Liabilities 18 8,238,168 8,201,006 8,246,040

Non-Current Liabilities 451,095,778 480,530,891 456,827,857

Long-term Liabilities 18 210,434,634 218,675,316 202,089,686

Retirement Benefit Liabilities 19 200,596,651 218,448,583 202,275,574

Non-current Provisions 20 40,064,493 43,406,992 52,462,597

Total Liabilities 700,657,843 723,272,886 684,225,957

Total Assets and Liabilities 2,334,731,702 2,079,757,577 2,148,069,754

NET ASSETS 2,334,731,702 2,079,757,577 2,148,069,754

Accumulated Surplus 21 2,334,731,702 2,079,757,577 2,148,069,754

Total Net Assets 2,334,731,702 2,079,757,577 2,148,069,754

2017


STATEMENT OF FINANCIAL POSITION AT 30 June 2017

3

Budget Budget Actual Actual

2016 2017 Note 2017 2016

R R R R

REVENUE

Revenue from Non-exchange Transactions

443,808,235 469,708,261 Property Rates 22 468,496,818 484,397,277

21,679,300 20,660,000 Fines and Penalties 19,915,146 17,406,849

2,965,000 3,270,000 Licences and Permits 2,801,133 2,850,726

5,800,000 4,800,000 Income for Agency Services 6,975,018 6,486,266

290,850,992 266,907,029 Government Grants and Subsidies Received 26 253,447,128 275,943,005

- - Public Contributions and Donations 27 - 260,514

Revenue from Exchange Transactions

1,012,665,821 1,062,887,246 Service Charges 24 1,068,239,402 1,004,894,715

10,305,500 10,690,000 Rental of Facilities and Equipment 25 10,024,738 9,839,067

19,000,000 20,000,000 Interest Earned - External Investments 23 21,576,378 20,995,888

80,000,000 120,000,000 Interest Earned - Outstanding Debtors 23 130,078,100 101,386,838

27,758,913 24,759,335 Other Income 28 25,958,133 23,986,595

- - Gains on Disposal of Property, Plant and Equipment 2,658,646 1,785,600

1,914,833,761 2,003,681,871 Total Revenue 2,010,170,639 1,950,233,339

EXPENDITURE

601,580,484 644,340,070 Employee Related Costs 29 566,597,417 602,966,171

21,365,290 25,944,063 Remuneration of Councillors 30 25,011,009 20,948,087

53,600,000 60,617,000 Depreciation and Amortisation 31 58,707,853 57,792,050

161,000,000 190,500,000 Impairment Losses 32 190,194,771 159,613,107

29,689,565 27,790,073 Finance Costs 33 27,789,438 29,018,431

462,400,000 512,500,000 Bulk Purchases 34 491,966,152 454,009,890

34,194,701 44,362,888 Contracted Services 35 42,170,495 31,332,201

61,871,500 62,590,000 Grants and Subsidies Paid 36 46,933,287 39,321,064

327,959,057 351,881,513 General Expenses 37 302,264,114 318,847,172

155,000 155,000 Loss on Inventory 69,293 102,234

- - Foreign Exchange Loss 183,750 409,474

- - Impairment of Property, Plant and Equipment 3,308,937 -

1,753,815,597 1,920,680,607 Total Expenditure 1,755,196,515 1,714,359,881

161,018,164 83,001,264 SURPLUS FOR THE YEAR 254,974,125 235,873,458

Refer to Appendix E(1) for explanation of budget variances 0.00 0.00

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 June 2017


4

STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 30 June 2017

Total for

Note Housing Capital Self COID Accumulated Accumulated

Development Replacement Insurance Surplus Total

Fund Reserve(CRR) Reserve Reserve Surplus Account

R R R R R R

2016

Balance at 30 June 2015 73,310,638 23,206,160 10,195,590 1,782,239,582 1,888,951,970 1,888,951,970

Correction of Error 39 (45,067,852) (45,067,852) (45,067,852)

Restated Balance - 73,310,638 23,206,160 10,195,590 1,737,171,730 1,843,884,119 1,843,884,119

Surplus for the year 235,873,458 235,873,458 235,873,458

Transfer to Capital Replacement Reserve 68,000,000 (68,000,000) - -

Property, Plant and Equipment purchased (71,251,874) 71,251,874 - -

Contribution to Insurance Reserve 342,130 414,845 (756,975) - -

Balance at 30 June 2016 - 70,058,765 23,548,290 10,610,435 1,975,540,087 2,079,757,577 2,079,757,577

(0.000) -

2017

Restated Balance - 70,058,765 23,548,290 10,610,435 1,975,540,087 2,079,757,577 2,079,757,577

Surplus for the year 254,974,125 254,974,125 254,974,125

Transfer to Capital Replacement Reserve 60,000,000 (60,000,000) - -

Property, Plant and Equipment purchased (37,927,281) 37,927,281 - -

Contribution to Insurance Reserve 544,595 110,275 (654,870) - -

Balance at 30 June 2017 - 92,131,484 24,092,886 10,720,710 2,207,786,622 2,334,731,702 2,334,731,702

Details on the movement of the Funds and Reserves are set out in Note 21.


Description

Accumulated Surplus Account

5

Actual Actual Budget

Note 2017 2016 2017

R R R

CASH FLOWS FROM OPERATING ACTIVITIES

Grants received 26 253,447,128 275,943,005 266,907,029

Sale of goods and services 41 1,203,016,936 1,188,195,632 1,367,238,971

Employee Costs 29 566,597,417 602,966,171 644,340,070

Supplier payments 41 919,163,159 808,243,414 919,175,930

Cash generated from Operations 41 (29,296,512) 52,929,052 70,630,000

Interest received 23 151,654,478 122,382,726 120,000,000

Interest paid 33 (27,789,438) (29,018,431) (27,757,000)

NET CASH FLOWS FROM OPERATING ACTIVITIES 94,568,528 146,293,348 162,873,000

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of Property, Plant and Equipment 9 (116,597,900) (145,546,918) (149,865,000)

Purchase of Intangible Assets 10 (2,366,004) (3,766,933) -

Purchase of Investment Property 11 (115,400) (2,336,988) -

NET CASH FLOWS USED IN INVESTING ACTIVITIES (119,079,303) (151,650,839) (149,865,000)

CASH FLOWS FROM FINANCING ACTIVITIES

Loans repaid (8,203,519) (10,824,084) (8,246,000)

NET CASH FLOWS USED IN FINANCING ACTIVITIES (8,203,519) (10,824,084) (8,246,000)

NET DECREASE IN CASH AND CASH EQUIVALENTS 6 (32,714,295) (16,181,575) 4,762,000

0.00

Cash and Cash Equivalents at the beginning of the year 259,275,698 275,457,274 259,275,000

Cash and Cash Equivalents at the end of the year 226,561,404 259,275,698 264,037,000


CASH FLOW STATEMENT FOR THE YEAR ENDED 30 June 2017

6

1. BASIS OF PRESENTATION

1. 1 CHANGES IN ACCOUNTING POLICY AND COMPARABILITY

1. 2 SIGNIFICANT JUDGEMENTS AND SOURCES OF ESTIMATION UNCERTAINTY

1. 2. 1 Revenue Recognition


ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS


A summary of the significant accounting policies, which have been consistently applied, are disclosed below.

(b) results in the financial statements providing reliable and more relevant information about the effects of

transactions, other events or conditions on the municipality’s financial position, financial performance or cash flow.

The annual financial statements have been prepared in accordance with the Standards of Generally Recognised

Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting

Standards Board and the Municipal Finance Management Act 2003 (Act Number 56 of 2003).

The Accounting Policies have been consistently applied, except where otherwise indicated below:

The municipality changes an accounting policy only if the following instances:

In the application of the municipality's accounting policies, which are described below, management is required to

make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not

readily apparent from other sources. The estimates and associated assumptions are based on historical experience

and other factors that are considered to be relevant. Actual results may differ from these estimates.

These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates

are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of

the revision and future periods if the revision affects both current and future periods.

Accounting Policy 10.1 on Revenue from Exchange Transactions and Accounting Policy 10.2 on Revenue from Non-

exchange Transactions describes the conditions under which revenue will be recorded by the management of the

municipality.

The following are the critical judgements, apart from those involving estimations, that the management have made in

the process of applying the municipality’s Accounting Policies and that have the most significant effect on the

amounts recognised in the Annual Financial Statements:

These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with

historical cost convention unless specified otherwise. They are presented in South African Rand.

For the years ended 30 June 2016 and 30 June 2017 the municipality has adopted the accounting framework as set

out in point 1 above. The details of any resulting changes in accounting policy and comparative restatements are set

out below.

(a) is required by a Standard of GRAP; or

7

1. BASIS OF PRESENTATION (continued)

1. 2 SIGNIFICANT JUDGEMENTS AND SOURCES OF ESTIMATION UNCERTAINTY(continued)

1. 2. 1 Revenue Recognition (continued)

1. 2. 2 Water Inventory

1. 2. 3 Budget information

1. 2. 4

1. 2. 5 Impairment of financial assets and financial liabilities

In making their judgement, the management considered the detailed criteria for the recognition of revenue as set out

in GRAP 9: Revenue from Exchange Transactions and GRAP 23: Revenue, as far as Revenue from Non-Exchange

Transactions is concerned. In particular, whether the municipality, (i) when goods are sold, had transferred to the

buyer the significant risks and rewards of ownership of the goods and (ii) when services are rendered, whether the

service has been rendered. Also of importance is the estimation process involved in initially measuring revenue at

the fair value thereof. The management of the municipality is satisfied that recognition of the revenue in the current

year and prior year is appropriate.




The estimation of water inventory in the reservoirs are based on the measurement of water via the electronic level

sensors where the level indicates the depth of water in the reservoir which is then converted into volumes based on

the total capacity of the relevant reservoir. Furthermore, the length and width of all pipes are also taken into account

during determining the volume of water on hand at year end. Refer to Note 4 in the annual financial statements.

Deviations between the budget and actual amounts are regarded as material if they exceed a 10% deviation. All

material differences are explained in the notes/appendices to the annual financial statements.

Impairment of property, plant and equipment, intangible assets, investment property, heritage

assets and inventories

The accounting Policy on "PPE - Impairment of assets and accounting policy" on "Intangible assets - subsequent

measurement, amortisation and impairment "and accounting policy on "Inventory - Subsequent measurement"

describes the conditions under which non-financial assets are tested for potential impairment losses by the

management of the municipality. Significant estimates and judgements are made relating to PPE impairment testing,

Intangible assets impairment testing and write down of Inventories to the lowest of cost and net realisable values

(NRV).

In making the above-mentioned estimates and judgement, management considered the subsequent measurement

criteria and indicators of potential impairment losses as set out in GRAP 26: "Impairment of cash generating assets"

and GRAP 21: "Impairment of Non - Cash generating Assets". In particular, the calculation of the recoverable service

amount for PPE and intangible assets and the NRV for inventories involve significant judgment by management.

The accounting policy on Impairment of financial assets and financial liabilities describes the process followed to

determine the value by which financial assets and financial liabilities should be impaired. In making the estimation of

the impairment, the management of the municipality considered the detailed criteria of impairment of financial assets

as set out in GRAP104: 'Financial Instruments' and used its judgement to select a variety of methods and make

assumptions that are mainly based on market conditions existing at the end of the reporting period. The

management of the municipality is satisfied that the impairment of financial assets and financial liabilities recorded

during the current and prior year is appropriate.

8


1. 2. 6 Impairment of trade receivables

1. 2. 7 Provisions and contingent liabilities

1. 2. 8 Useful lives of property, plant and equipment

1. 2. 9 Defined benefit plan liabilities

1. 2. 10 Financial assets and liabilities

1. 3 PRESENTATION CURRENCY

1. 4 GOING CONCERN ASSUMPTION

As described in the accounting policy; 'Property, Plant and Equipment', the municipality depreciates its property,

plant and equipment, investment property and amortise intangible assets over the estimated useful lives of the

assets, taking into account the residual values of the assets at the end of their useful lives, which is determined when

the assets are available for use. The estimation of residual values of assets is based on management's judgement

as to whether the assets will be sold or used to the end of their useful lives and in what condition they will be at that

time.

As described in the accounting policy the municipality obtains actuarial valuations of its defined benefit plan liabilities.

The defined benefit obligations of the municipality that were identified are Post-retirement Health Benefit Obligations

and Long service Awards and Ex-gratia awards. The estimated liabilities are recorded in accordance with the

requirements of GRAP 25. Details of the liabilities and the key assumptions made by the actuaries in estimating the

liabilities are provided in Note 20 to the Annual Financial Statements.

The classification of financial assets and liabilities, into categories, is based on judgement by management. The

accounting policy on Financial Assets Classification and accounting policy on Financial Liabilities Classification

describe the factors and criteria considered by management of the municipality in the classification of financial

assets and liabilities. In making the above-mentioned judgements, management considered the definition and

recognition criteria for the classification of financial instruments as set out in GRAP 104 "Financial Instruments".

The Annual Financial Statements have been prepared on a going concern basis.

The Annual Financial Statements are presented in South African Rand, rounded off to the nearest Rand, which is the

municipality's functional currency.


The calculation in respect of the impairment of trade receivables is based on an assessment of the extent to which

debtors have defaulted on payments already due, and an assessment of their ability to make payments based on

their creditworthiness. This was performed per service-identifiable categories across all classes of debtors.

Management judgement is required when recognising and measuring provisions and when measuring contingent

liabilities as set out in the notes. Provisions are discounted where the effect of discounting is material using actuarial

valuations.



9


1. 5 OFFSETTING

1. 6

GRAP 32 Service Concession arrangements: Grantor

GRAP 34 Separate Financial Statements

GRAP 35 Consolidated Financial Statements

GRAP 36 Investments in Associates and Joint Ventures

GRAP 37 Joint arrangements

GRAP 38 Disclosure of Interests in Other Entities

GRAP 108 Statutory receivables

GRAP 109 Accounting by Principals and Agents

GRAP 110 Living and non-living Resources

Amendments to GRAP 16 and GRAP 17 - Effective 1 April 2016

Improvements were also made to a number of GRAP standards during the period under review.

2.

2. 1 Capital replacement reserve (CRR)



STANDARDS, AMENDMENTS TO STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET

EFFECTIVE

Application of the above GRAP standards will be effective from a date to be announced by the Minister of Finance.

This date is not currently available.

The following GRAP standards became effective during the financial year ended 30 June 2017:

The impact of above standards becoming effective has been considered by management. The impact (if any) of

these new effective standards has been disclosed in Note 39 of the Annual Financial Statements.

The ASB Directive 5 paragraph 29 allows for the Municipality to select to apply the principles established in a

Standard of GRAP that has been issued, but is not yet in effect, in developing an appropriate accounting policy

dealing with a particular transaction or event before applying paragraph 12 of the Standard of GRAP on Accounting

Policies, Changes in Accounting Estimates and Errors.


The following GRAP standards and interpretations have been issued but are not yet effective and have not been

early adopted by the municipality:

Assets, liabilities, revenues and expenses have not been offset except when offsetting is required or permitted by a

Standard of GRAP.

STATUTORY FUNDS AND RESERVES

Included in the accumulated surplus of the municipality, are the following reserves that are maintained in terms of

specific requirements:

In order to finance the provision of infrastructure and other property, plant and equipment from internal sources,

amounts are transferred from the accumulated surplus to the CRR in terms of delegated powers.

The following provisions are set for the creation and utilisation of the CRR:

• The cash funds that back up the CRR are invested until utilised. The cash may only be invested in accordance with

the investment policy of the municipality.

• The CRR may only be utilised for the purpose of purchasing items of property, plant and equipment, and may not

be used for the maintenance of these items.

• Whenever an asset is purchased out of the CRR, an amount equal to the cost price of the asset is transferred from

the CRR, and the accumulated surplus is credited by a corresponding amount.

• If a profit is made on the sale of assets, the profit on these assets is reflected in the Statement of Financial

Performance and is not transferred to the CRR, as it is regarded as revenue.

10

2.

2. 2 Self insurance reserve

2. 3 Compensation for occupational injuries and diseases (COID) reserve

3. PROPERTY, PLANT AND EQUIPMENT

3. 1 Initial Recognition

A general insurance reserve has been established, and subject to reinsurance where deemed necessary, it covers

claims that may occur. Premiums are charged to the respective services and credited to the operating account as

per budgeted amounts. Reinsurance premiums paid to external reinsurers and other expenditure are regarded as an

expense, and are debited against the operating accounts shown in the Statement of Financial Performance. The net

surplus or deficit on the insurance operating accounts is transferred to or from the insurance reserve via the

Statement of Changes in Net Assets. The balance of the self-insurance reserve is invested in short-term cash

investments. Interest earned on the insurance reserve is recorded as interest earned in the Statement of Financial

Performance.

The Municipality has been exempted from making contributions to the Compensation Commissioner for occupational

injuries and diseases in terms of Section 84 of the COID Act (Act No. 130 of 1993). The certificate of exemption

issued by the Commissioner, and as prescribed by the COID Act, requires that the Municipality deposits cash and/or

securities with the Commissioner. Premiums are charged to the respective services and credited to the operating

account as per budgeted amounts. The net surplus or deficit on the COID operating account is transferred to or from

the COID reserve via the Statement of Changes in Net Assets.

Property, plant and equipment are tangible non-current assets that are held for use in the production or supply of

goods or services, rental to others, or for administrative purposes, and are expected to be used during more than

one year.

The cost of an item of property, plant and equipment is recognised as an asset when:

- it is probable that future economic benefits or service potential associated with the item will flow to the municipality;

and

- if the cost or fair value of the item can be measured reliably.

Property, plant and equipment is initially measured at cost on its acquisition date.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the

asset to the location and condition necessary for it to be capable of operating in the manner intended by

management. Trade discounts and rebates are deducted in arriving at the cost.

Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary

assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value

(the cost). If the acquired item's fair value was not determinable, it's deemed cost is the carrying amount of the

asset(s) surrendered.

When significant components of an item of property, plant and equipment have different useful lives, they are

accounted for as separate items (major components) of property, plant and equipment.

Major spare parts and servicing equipment qualify as property, plant and equipment when the municipality expects to

use them during more than one period. Similarly, if the major spare parts and servicing equipment can be used only

in connection with an item of property, plant and equipment, they are accounted for as property, plant and

equipment.


STATUTORY FUNDS AND RESERVES (Continued)



11

3. PROPERTY, PLANT AND EQUIPMENT (continued)

3. 2 Subsequent Measurement

3. 3 Depreciation

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Years

Buildings 30

Furniture and fixtures 5 - 15

Motor vehicles 5 - 15

Computer equipment 5 - 10

Infrastructure

- Roads and paving 1 - 80

- Electricity 1 - 80

- Water 1 - 100

- Sewerage 1 - 60

- Landfill sites 25 - 55

- Storm water 1 - 60

- Streetlights 1 - 40

Community Buildings

- Recreational facilities 30

- Security 3 - 15

Machinery and equipment 5 - 15

Water network 15

Land Indefinite




Subsequent expenditure relating to property, plant and equipment is capitalised if it is probable that future economic

benefits or potential service delivery associated with the subsequent expenditure will flow to the entity and the cost or

fair value of the subsequent expenditure can be reliably measured. Subsequent expenditure incurred on an asset is

only capitalised when it increases the capacity or future economic benefits associated with the asset. Where the

municipality replaces part of an asset, it derecognises the part of the asset being replaced and capitalises the new

component. Subsequently, all property plant and equipment are measured at cost (or deemed cost), less

accumulated depreciation and accumulated impairment losses. Compensation from third parties for items of

property, plant and equipment that were impaired, lost or surrendered is included in the surplus or deficit when the

compensation becomes receivable.

The residual value, useful life and depreciation method of each asset are reviewed, if there is an indication that a

change may have occurred in the estimated useful life or residual value of the asset. If the expectations differ from

previous estimates, the change is accounted for in accordance with GRAP 3, either prospectively as a change in the

accounting policy, or retrospectively as a prior period error depending on the specific circumstances.

Depreciation only commences when the asset is available for use, unless stated otherwise.

Reviewing the useful life of an asset does not require the municipality to amend the previous estimate unless

expectations differ from the previous estimate. Each part of an item of property, plant and equipment with a cost that

is significant in relation to the total cost of the item is depreciated separately. The depreciation charge for each

period is recognised in the surplus or deficit unless it is included in the carrying amount of another asset.

Land is not depreciated as it is regarded as having an indefinite useful life. Depreciation on assets other than land is

calculated on cost, using the straight line method, to allocate their cost amounts to their residual values over the

estimated useful lives of the assets. The depreciation method used reflects the pattern in which the asset’s future

economic benefits or service potential are expected to be consumed by the municipality.

12

PROPERTY, PLANT AND EQUIPMENT (continued)

3. 4 Incomplete Construction Work

3. 5 Leased Assets

3. 6 Heritage Assets

3. 7 Infrastructure Assets

3. 8 Derecognition of property, plant and equipment

3. 9 Impairment of assets

3. 9. 1 Impairment of Cash generating assets

Gains from the sale of assets are classified as revenue. Gains or losses from the sale of assets are calculated as the

difference between the carrying value of assets (cost less accumulated depreciation and accumulated impairment

losses) and the disposal proceeds. This is included in the Statement of Financial Performance as a gain or loss on

disposal of property, plant and equipment.

Infrastructure Assets are any assets that are part of a network of similar assets. Infrastructure assets are shown at

cost less accumulated depreciation and accumulated impairment. Infrastructure assets are treated similarly to all

other assets of the municipality in terms of the asset management policy.

Assets capitalised under finance leases are depreciated over their expected useful lives on the same basis as PPE

controlled by the entity or where shorter, the term of the relevant lease if there is no reasonable certainty that the

municipality will obtain ownership by the end of the lease term.

Heritage assets, which are culturally significant resources of nature (examples are statues, graves, memorial assets,

libraries, canons, etc.) and according to GRAP 103 should be shown at cost and are not depreciated owing to

uncertainty regarding their estimated useful lives.


Incomplete construction work is stated at historical cost. Depreciation only commences when the asset is available

for use. Significantly delayed projects and projects that have ceased entirely are disclosed separately in the notes to

the financial statements. Management will review the facts and circumstances around each individual project before

classifying it as significantly delayed.



An item of Property, Plant and Equipment of the municipality is derecognised when the asset is disposed of or when

there are no further economic benefits or service potential expected from the use of the asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in the surplus

or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant

and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of

the item.

The municipality assesses at each reporting date whether there is any indication that an asset may be impaired. If

any such indication exists, the municipality estimates the recoverable amount of the individual asset.

Assets which the municipality holds for rentals to others and subsequently routinely sell as part of the ordinary

course of activities, are transferred to inventories when the rentals end or the assets are available-for-sale. These

assets are not accounted for as non-current assets held for sale. Proceeds from sales of these assets are

recognised as revenue. All cash flows on these assets are included in cash flows from operating activities in the

municipality.

If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-

generating unit to which the asset belongs is determined.

13


3. 9. 2 Impairment of Non-Cash generating assets

An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the

carrying amount of the unit. The impairment loss is allocated to reduce the carrying amount of the assets of the unit

as follows:

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to

its recoverable amount. That reduction is an impairment loss.




An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised

immediately in the surplus or deficit.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its

value in use.

The recoverable service amount is the higher of a non-cash generating asset's fair value less costs to sell and its

value in use. The value in use for a non-cash generating asset is the present value of the asset’s remaining service

potential.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised

immediately in the surplus or deficit.

To the assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.


any such indication exists, the municipality estimates the recoverable service amount of the asset.

The municipality assesses at each reporting date whether there is any indication that an impairment loss recognised

in prior periods for assets may no longer exist or may have decreased. If any such indication exists, the recoverable

amounts of those assets are estimated.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation is

recognised immediately in the surplus or deficit.

The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the

carrying amount that would have been determined had no impairment loss been recognised for the asset in prior

periods.

If the recoverable service amount of an asset is less than its carrying amount, the carrying amount of the asset is

reduced to its recoverable service amount. That reduction is an impairment loss.

If it is not possible to estimate the recoverable service amount of the individual asset, the recoverable service

amount of the cash-generating unit to which the asset belongs is determined.

14


3. 9. 2 Impairment of Non-Cash generating assets (continued)

4.


▪ it is technically feasible to complete the intangible asset so that it will be available for use;

▪ management intends to complete the intangible asset and use or sell it;

▪ there is an ability to use or sell the intangible asset;

▪ it can be demonstrated how the intangible asset will generate probable future economic benefits;

▪

▪ the expenditure attributable to the intangible asset during its development can be reliably measured.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred.

Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is

ready for use on a straight-line basis over its useful life, not exceeding five years. Development assets are tested for

impairment annually, in accordance with GRAP 21/ 26.

Internally generated intangible assets are subject to strict recognition criteria before they are capitalised. Research

expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design

and testing of new or improved products) are recognised as intangible assets when the following criteria are fulfilled:

adequate technical, financial and other resources to complete the development and to use or sell the intangible

asset are available; and


Identifiable non–monetary assets without physical substance are classified and recognised as intangible assets. The

municipality recognises an intangible asset in its Statement of Financial Position only when it is probable that the

expected future economic benefits or service potential that are attributable to the asset will flow to the municipality

and the cost or fair value of the asset can be measured reliably.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation is

recognised immediately in the surplus or deficit. Any reversal of an impairment loss of a revalued asset is treated as

a revaluation increase.




service amounts of those assets are estimated.

INTANGIBLE ASSETS



periods.

To the assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.



as follows:


15

4.

4. 1 Initial Recognition (continued)

4. 2 Subsequent Measurement, Amortisation and Impairment

4. 3 Derecognition

The estimated useful life, residual values and amortisation method are reviewed annually at the end of the financial

year. Any adjustments arising from the annual review are applied prospectively as a change in accounting estimate

in the Statement of Financial Performance.

After initial recognition, an intangible asset is carried at its cost less any accumulated amortisation and any

accumulated impairment losses.

In terms of GRAP 31 expenditure on an intangible item that was initially recognised as an expense shall not be

recognised as part of the cost of an intangible asset at the later date. Intangible assets are distinguished between

internally generated intangible assets and other intangible assets. It is further distinguished between indefinite or

finite useful lives. Amortisation is charged on a straight-line basis over the intangible assets' useful lives, which are

estimated to be between 3 to 5 years, the residual value of assets with finite useful lives is zero, unless an active

market exists. Where intangible assets are deemed to have an indefinite useful life, such intangible assets are not

amortised, for example servitudes obtained by the municipality give the municipality access to land for specific

purposes for an unlimited period, however such intangible assets are subject to an annual impairment test.

Intangible assets are annually tested for impairment, including intangible assets not yet available for use. Where

items of intangible assets have been impaired, the carrying value is adjusted by the impairment loss, which is

recognised as an expense in the period that the impairment is identified except where the impairment reverses a

previous revaluation. The impairment loss is the difference between the carrying amount and the recoverable

amount.


Amortisation only commences when the asset is available for use, unless stated otherwise.

Intangible assets are derecognised when the asset is disposed of or when there are no further economic benefits or

service potential expected from the use of the asset. The gain or loss arising on the disposal or retirement of an

intangible asset is determined as the difference between the net disposals proceeds and the carrying value and is

recognised in the Statement of Financial Performance.

INTANGIBLE ASSETS (continued)


The cost of an intangible asset is the purchase price and other costs attributable to bring the intangible asset to the

location and condition necessary for it to be capable of operating in the manner intended by the municipality, or

where an intangible asset is acquired at no cost, or for a nominal cost, the cost shall be its fair value as at the date of

acquisition. Trade discounts and rebates are deducted in arriving at the cost. Intangible assets acquired separately

or internally generated are reported at cost less accumulated amortisation and accumulated impairment losses.

Where an intangible asset is acquired in exchange for a non-monetary asset or monetary assets, or a combination of

monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired

item's fair value was not determinable, it's deemed cost is the carrying amount of the assets surrendered.


16

5.


▪

▪

▪

▪

▪

▪ Property being constructed or developed on behalf of third parties;

▪

▪ Property that is being constructed or developed for future use as investment property;

▪ Property that is leased to another entity under a finance lease;

▪

▪ Property held for strategic purposes or service delivery.

INVESTMENT PROPERTY

Investment property includes property e.g. (land or a building, or part of a building, or both land or buildings held

under a finance lease) held to earn rentals and/or for capital appreciation, rather than held to meet service delivery

objectives, the production or supply of goods or services, or the sale of an asset in the ordinary course of operations.

All properties held to earn market-related rentals or for capital appreciation or both and that are not used for

administrative purposes and that will not be sold within the next 12 months are classified as Investment

Properties;

The cost of self-constructed investment property is the cost at date of completion.

Based on management's judgement, the following criteria have been applied to distinguish investment properties

from owner occupied property or property held for resale:


At initial recognition, the municipality measures investment property at cost including transaction costs once it meets

the definition of investment property. However, where an investment property was acquired through a non-exchange

transaction (i.e. where it acquired the investment property for no or a nominal value), its cost is its fair value as at the

date of acquisition.

A building owned by the entity (or held by the entity under a finance lease) and leased out under one or more

operating leases. This will include the property portfolio rented out by the Housing Board on a commercial basis

on behalf of the municipality; and


Land held for a currently undetermined future use. e.g. (If the Municipality has not determined that it will use the

land as owner-occupied property or for short-term sale in the ordinary course of business, the land is regarded as

held for capital appreciation);


A building that is vacant but is held to be leased out under one or more operating leases on a commercial basis

to external parties.

Property held to provide a social service and which also generates cash inflows, e.g. property rented out below

market rental to sporting bodies, schools, low income families, etc.; and

Owner-occupied property, including (among other things) property held for future use as owner-occupied

property, property held for future development and subsequent use as owner-occupied property, property

occupied by employees such as housing for personnel (whether or not the employees pay rent at market rates)

and owner-occupied property

awaiting disposal;

The following assets do not fall in the ambit of Investment Property and shall be classified as property, plant and

equipment or Inventory, as appropriate:

Property intended for sale in the ordinary course of operations or in the process of construction or development

for such sale;

17

5. INVESTMENT PROPERTY (continued)

5. 2 Subsequent Measurement - Cost Model

5. 3 Derecognition

6. FINANCIAL INSTRUMENTS

6. 1 Financial Assets - Classification

A financial asset is any asset that is cash or contractual right to receive cash.

▪ derivatives;

▪ combined instruments that are designated at fair value;

▪ instruments held for trading. A financial instrument is held for trading if:

- it is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; or

- on initial recognition it is part of a portfolio of identified financial instruments that are managed together and

for which there is evidence of a recent actual pattern of short term profit-taking;



In accordance with GRAP 104 the financial assets of the municipality are classified as follows into the categories

allowed by this standard.

An investment property shall be derecognised (eliminated from the statement of financial position) on disposal or

when the investment property is permanently withdrawn from use and no future economic benefits or service

potential are expected from its disposal.

Investment Property is measured using the Cost Model and is stated at cost less accumulated depreciation and

accumulated impairment losses. Depreciation is calculated on cost, using the Straight-Line Method over the useful

life of the property, which is estimated at 20 - 30 years. Components of assets that are significant in relation to the

whole asset and that have different useful lives are depreciated separately. The gain or loss arising on the disposal

of an Investments proceeds and the carrying value and is recognised in the Statement of Financial Performance.


Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial liabilities that

have fixed or determinable payments, excluding those instruments that are quoted in an active market. They are

included in current assets except for maturity greater than 12 months which are classified as non current assets.

Financial assets are amortised cost are initially recognised at fair value plus transaction cost are directly attributable

to the acquisition or issue of the financial asset. After initial recognition financial assets are measured at amortised

cost using the effective interest rate method less the provision for impairment.

Financial assets at cost are investments in residual interests that do not have a quoted market price in an active

market and whose fair value cannot be reliably measured.

- non-derivative financial assets or financial liabilities with fixed or determinable payments that are

designated at fair value at initial recognition; and

- financial instruments that do not meet the definition of financial instruments at amortised cost or financial

instruments at cost.

18

6. FINANCIAL INSTRUMENTS (continued)

Class Category

Non - current Investments Financial asset measured at amortised cost

Long-term receivables Financial asset measured at amortised cost

Receivables from exchange transactions Financial asset measured at amortised cost

Receivables from non-exchange transactions Financial asset measured at amortised cost

Bank, cash and cash equivalents Financial asset measured at amortised cost

Current Portion of Non-current Investments Financial asset measured at amortised cost

Current Portion of Long-term receivables Financial asset measured at amortised cost

6. 2 Financial Liabilities - Classification

A financial liability is a contractual obligation to deliver cash or another financial asset to another entity.

There are three main categories of financial liabilities. The classification determines how they are measured

Class Category

Long-term Liabilities Financial liability measured at amortised cost

Payables from exchange transactions Financial liability measured at amortised cost

Payables from non- exchange transactions Financial liability measured at amortised cost

Bank Overdraft Financial liability measured at amortised costShort-term Loans Financial liability measured at amortised cost

Current portion of long-term liabilities Financial liability measured at amortised cost


The municipality has the following types of financial assets of the face of the State of Financial Position:

Cash includes cash on hand (including petty cash) and cash at bank (including call deposits). Cash equivalents are

short term and highly liquid investments, readily convertible into known amounts of cash, that are held with registered

institutions with maturities of three months or less and are subject to an insignificant risk of change in value. For the

purposes of cash flow statement, cash and cash equivalents comprise cash on hand, deposits held on call with

banks net of bank overdrafts. The municipality categorises cash and cash equivalents as financial assets at

amortised cost.



19

6.

6. 3 Risk management of financial assets and liabilities

The Municipality has exposure to the following risks from its use of financial instruments:

▪ credit risk

▪ liquidity risk

▪ market risk

Risks and exposure are disclosed as follows:

Market risk

Credit risk

Liquidity risk

The maximum exposure to cash flow and fair value risk, price risk and foreign currency risk is disclosed.

A sensitivity analysis for each of the market risks is done.

Each class of financial instrument is disclosed separately.

Maximum exposure to credit risk not covered by collateral is specified.

Financial instruments covered by collateral are specified.



Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices

will affect the municipality's income or the value of its holdings of financial instruments. The objective of market risk

management is to manage and control market risk exposures within acceptable parameters, while optimising the

return.

Liquidity risk is the risk that the Municipality will encounter difficulty in meeting the obligations associated with its

financial liabilities that are settled by delivering cash or another financial asset. The municipality’s approach to

managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when

due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the

municipality ’s reputation.

Liquidity risk is managed by ensuring that all assets are reinvested at maturity at competitive interest rates in relation

to cash flow requirements. Liabilities are managed by ensuring that all contractual payments are met on a timeous

basis and, if required, additional new arrangements are established at competitive rates to ensure that cash flow

requirements are met.

Credit risk is the risk of financial loss to the Municipality if a customer or counterparty to a financial instrument fails to

meet its contractual obligations, and arises principally from the municipality receivables from customers and

investment securities.

A maturity analysis for financial assets and liabilities that shows the remaining contractual maturities. A maturity

analysis for financial liabilities (where applicable) that shows the remaining undiscounted contractual maturities is

disclosed in note 48 to the annual financial statements.


FINANCIAL INSTRUMENTS (continued)

It is the policy of the municipality to disclose information that enables the user of its financial statements to evaluate

the nature and extent of risks arising from financial instruments to which the municipality is exposed on the reporting

date.

20

7.

7. 1 Finance leases - Municipality as lessee

▪ Effective interest rate method

▪ Derecognition

▪ Finance cost expensed when incurred

7. 2 Operating leases - Municipality as lessor

7. 3 Operating leases - Municipality as lessee

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in

the lease.


Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the

fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding

liability to the lessor is included in the statement of financial position as a finance lease obligation.

Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The

finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the

remaining balance of the liability.

Any contingent rents are expensed in the period in which they are incurred.

Operating lease revenue is recognised as revenue on a straight-line basis over the lease term.

The aggregate cost of incentives is recognised as a reduction of rental revenue over the lease term on a straight-line

basis. The aggregate benefit of incentives is recognised as a reduction of rental expense over the lease term on a

straight-line basis.

Income for leases is disclosed under revenue in statement of financial performance.

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the

leased asset and recognised as an expense over the lease term on the same basis as the lease revenue.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference

between the amounts recognised as an expense and the contractual payments are recognised as an operating lease

asset or liability.

When a lease includes both land and buildings elements, the entity assesses the classification of each element

separately.


A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A

lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to

ownership.

LEASES


21

8.

8. 1 Subsequent measurement

Inventories are measured at the lower of cost and current replacement cost where they are held for;

▪ distribution at no charge or for a nominal charge; or

▪ consumption in the production process of goods to be distributed at no charge or for a nominal charge.

Current replacement cost is the cost the municipality incurs to acquire the asset on the reporting date.

9. NON-CURRENT ASSETS HELD-FOR-SALE

The disclosure requirements per the Standard of GRAP on Presentation of Financial Statements require entities to

disclose information about significant assets and groups of assets and liabilities, or components (as defined in GRAP

100), that will be disposed of in future reporting periods. These disclosures are provided once management has

made a decision to dispose of certain assets, groups of assets and liabilities or components, instead of specific

presentation on the face of the statement of financial position.

Specific measurement requirements for assets held for sale over and above those already required in existing

Standards, are therefore not necessary.

When inventories are sold, the carrying amounts of those inventories are recognised as an expense in the period in

which the related revenue is recognised. If there is no related revenue, the expenses are recognised when the goods

are distributed, or related services are rendered. The amount of any write-down of inventories to net realisable value

or current replacement cost and all losses of inventories are recognised as an expense in the period the write-down

or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable

value or current replacement cost, are recognised as a reduction in the amount of inventories recognised as an

expense in the period in which the reversal occurs.

The cost of inventories is assigned using the weighted average cost formula. The same cost formula is used for all

inventories having a similar nature and use to the municipality.

Net realisable value is the estimated selling price in the ordinary course of operations less the estimated costs of

completion and the estimated costs necessary to make the sale, exchange or distribution.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and

segregated for specific projects are assigned using specific identification of the individual costs.

Included in inventory are consumable stores, raw materials, Work in progress, water inventory, unsold properties and

other arrangements. Subsequently inventories are measured at the lower of cost and net realisable value.

The cost of inventory comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the

inventories to their present location and condition.


INVENTORY

Inventories are initially measured at cost except where inventories are acquired through a non-exchange transaction,

then their costs is deemed to be equal to its fair value at the date of acquisition. Where inventory is manufactured,

constructed or produced, the cost includes, the cost of labour, materials and overheads used during the

manufacturing.



22

10

10 1. Revenue from Exchange Transactions

10 1. 1. Service Charges

10. 1 2 Prepaid electricity

10. 1 3 Finance income

10. 1. 4 Tariff charges

REVENUE RECOGNITION

Revenue in general is derived from a variety of sources which include rates levied, grants from other tiers of

government and revenue from trading activities and other services provided.

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in

the ordinary course of the municipality’s activities. Revenue is shown net of value-added tax, returns, rebates and

discounts.




Service charges relating to solid waste, sanitation and sewage are levied in terms of the approved tariffs. Service

charges relating to electricity and water are based on consumption. Meters are read on a monthly basis and are

recognised as revenue when invoiced. Provisional estimates of consumption, based on the consumption history, are

made monthly when meter readings have not been performed. The provisional estimates of consumption are

recognised as revenue when invoiced, except at year-end when estimates of consumption up to year-end are

recorded as revenue without being invoiced. Adjustments to provisional estimates of consumption are made in the

invoicing period in which meters have been read. These adjustments are recognised as revenue in the invoicing

period. In respect of estimates of consumption between the last reading date and the reporting date, an accrual is

made based on the average monthly consumption of consumers.

Service charges relating to refuse removal are recognised on a monthly basis in arrears by applying the approved

tariff to each property that has improvements. Tariffs are determined per category of property usage, and are levied

monthly based on the number of refuse containers on each property, regardless of whether or not all containers are

emptied during the month. Service charges from sewerage and sanitation are based on the type of service and the

number of sewer connections on all developed property, using the tariffs approved by Council and are levied

monthly.

In circumstances where services cannot readily be measured and quantified, a flat rate service charge is levied

monthly on such properties.

Revenue from the sale of electricity pre-paid meter cards are recognised at the point of sale and payment is made in

the month before year end, it's recognised based on an estimate of the prepaid electricity consumed as at the

reporting date.

Interest earned on investments is recognised in the Statement of Financial Performance on the time-proportionate

basis that takes into account the effective yield on the investment.

Revenue arising from the application of the approved tariff of charges is recognised when the relevant service is

rendered by applying the relevant authorised tariff. This includes the issuing of licences and permits.

The municipality recognises revenue when the amount of revenue can be reliably measured, it is probable that future

economic benefits will flow to the municipality and when specific criteria have been met for each of the municipality's

activities as described below. The amount of revenue is not considered to be reliably measurable until all

contingencies relating to the sale have been resolved. The municipality bases its estimates on historical results,

taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue from exchange transactions refers to revenue that accrued to the municipality directly in return for services

rendered / goods sold, the value of which approximates the consideration received or receivable.

23

10. REVENUE RECOGNITION (continued)

10. 1. 5 Income from Agency Services

10. 1. 6 Sale of goods (including houses)

▪ The municipality has transferred to the buyer the significant risks and rewards of ownership of the goods.

▪

▪ The amount of revenue can be measured reliably.

▪

▪ The costs incurred or to be incurred in respect of the transaction can be measured reliably.

10. 1. 7 Rentals

10. 2. Revenue from non -exchange transactions

10. 2. 1 Rates and Taxes

10. 2. 2 Fines

Revenue from the rental of facilities and equipment is recognised on a straight-line basis over the term of the lease

agreement.

It is probable that the economic benefits or service potential associated with the transaction will flow to the

municipality.

Revenue from property rates is recognised when the legal entitlement to this revenue arises. Collection charges are

recognised when such amounts are legally enforceable. Penalty interest on unpaid rates is recognised on a time

proportion basis with reference to the principal amount receivable and effective interest rate applicable. A composite

rating system charging different rate tariffs is employed. Rebates are granted to certain categories of ratepayers and

are deducted from revenue.

Events after the reporting date that are classified as adjusting events have been accounted for in the Annual

Financial Statements. The events after the reporting date that are classified as non-adjusting events after the

reporting date have been disclosed in the notes to the Annual Financial Statements.

Income for agency services is recognised on a monthly basis once the income collected on behalf of agents

has been quantified. The income recognised is in terms of the agency agreement.

Revenue from the sale of goods is recognised when all the following conditions have been met:

The municipality retains neither continuing managerial involvement to the degree usually associated with

ownership nor effective control over the goods sold.

Fines are defined as revenue from non-exchange transactions. It is revenue that arises from another entity without

directly giving approximately equal value in exchange or gives value to another entity without directly receiving

approximately equal value in exchange. Fines will be accounted on a accrual basis based on IGRAP 1.

Fines constitute both spot fines and summonses for which revenue is recognised when payment is received.

Fines are economic benefits or service potential received or receivable by entities as determined by a court or other

law enforcement body as a consequence of breach of laws and regulations. Where a defendant reaches an

agreement with a prosecutor that includes a payment of a penalty, instead of being tried in court, that penalty is

recognised as a fine.

Revenue from non-exchange transactions refers to transactions where the municipality received revenue from

another entity without directly giving approximately equal value in exchange. Revenue from non-exchange

transactions is generally recognised to the extent that the related receipt or receivable qualifies for recognition as an

asset and there is no liability to repay the amount.




24

10. REVENUE RECOGNITION (continued)

10. 2. 2 Fines (continued)

Initial recognition

Measurement

Impairment

10. 2. 3 Debt forgiveness

10. 2. 4 Other donations and contributions

10. 2. 5 Revenue from recovery of unauthorised, irregular, fruitless and wasteful expenditure

10. 2. 6 Conditional grants and receipts

▪ it is probable that the economic benefits or service potential associated with the transaction will flow to the entity,

▪ the amount of the revenue can be measured reliably, and

▪ to the extent that there has been compliance with any restrictions associated with the grant.

▪ best estimate of expenditure

Interest earned on investments is treated in accordance with grant conditions. If it is payable to the funder it is

recorded as part of the creditor and if it is the municipality’s interest it is recognised as interest earned in the

Statement of Financial Performance.

Revenue from fines shall be recognised when an inflow of resources from non-exchange transaction is probable. The

probability of inflow shall be determined when an allegation that an offence has been committed and that the offender

must appear in court or before other law enforcement body. Normally, fines require an entity/offender to transfer a

fixed amount of cash to the municipality and do not impose the obligation to the municipality to recognise a liability,

as such fines shall be recognised as revenue when receivables meets the definition of an asset and satisfies the

criteria for recognition as an asset.

Government grants and conditional receipts are recognised as revenue when:

Equitable share allocations are recognised revenue at the start of the financial year if no time-based restrictions

exist.

Revenue from the recovery of unauthorised, irregular, fruitless and wasteful expenditure is based on legislated

procedures, including those set out in the Municipal Finance Management Act (Act No.56 of 2003) and is recognised

when the recovery thereof from the responsible councillors or officials is virtually certain. Such revenue is based on

legislated procedures and is recognised when the recovery thereof from the responsible councillor or officials is

virtually certain. Revenue arising from the application of the approved tariff of charges is recognised when the

relevant service is rendered by applying the relevant authorised tariff. This includes the issuing of licences and

permits.

Income received from conditional grants, donations and funding are recognised as revenue to the extent that the

municipality has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent

that the criteria, conditions or obligations have not been met a liability is recognised. Government grants that are

receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial

support to the municipality with no future related costs are recognised in the Statement of Financial Performance in

the period in which they become receivable.

Donations are recognised on a cash receipt basis or where the donation is in the form of property, plant and

equipment, when such items of property, plant and equipment are available for use.


At initial and subsequent recognition, fines shall be measured based on fair value of the asset.

The municipality recognise revenue in respect of debt forgiveness when the former debt no longer meets the

definition of a liability or satisfies the criteria for recognition as a liability, provided that the debt forgiveness does not

satisfy the definition of a contribution from owners. Revenue arising from debt forgiveness is measured at the

carrying amount of debt forgiven.



Fines shall be assessed for indicators of impairment at the end of each reporting period. Fines not collected or fines

where no warrant of arrests or summonses have been issued shall be impaired at measurement date.

25

11. PROVISIONS AND CONTINGENCIES (continued)

Provisions are recognised when:▪ the municipality has a present obligation as a result of a past event;▪

▪ a reliable estimate can be made of the obligation.

▪ financial difficulty of the debtor;

▪ defaults or delinquencies in interest and capital repayments by the debtor;

▪

▪

▪

▪

11. 1. Environmental rehabilitation provision

the amount of the fee initially recognised less, where appropriate, cumulative amortisation recognised in accordance

with the Standard of GRAP on Revenue from Exchange Transactions.


the amount determined using in the Standard of GRAP on Provisions, Contingent Liabilities and Contingent Assets;

and

a decline in prevailing economic circumstances (e.g. high interest rates, inflation and unemployment) that impact

on the ability of entities to repay their obligations.

Where a fee is received by the municipality for issuing a financial guarantee and/or where a fee is charged on

Estimated long-term environmental provisions, comprising rehabilitation and landfill site closure, are based on the

Municipality's policy, taking into account current technological, environmental and regulatory requirements. The provision

for rehabilitation is recognised as and when the environmental liability arises. To the extent that the obligations relate to

the asset, they are capitalised as part of the cost of those assets. Any subsequent changes to an obligation that did not

relate to the initial related asset are charged to the Statement of Financial Performance.



Provisions are reviewed at reporting date and the amount of a provision is the present value of the expenditure

expected to be required to settle the obligation. When the effect of discounting is material, provisions are determined

by discounting the expected future cash flows that reflect current market assessments of the time value of money.

The impact of the periodic unwinding of the discount is recognised in the Statement of Financial Performance as a

finance cost as it occurs.

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the

holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original

or modified terms of a debt instrument.

Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions.

The municipality recognises a provision for financial guarantees and loan commitments when it is probable that an

outflow of resources embodying economic benefits and service potential will be required to settle the obligation and a

reliable estimate of the obligation can be made.

Determining whether an outflow of resources is probable in relation to financial guarantees requires judgement.

breaches of the terms of the debt instrument that result in it being payable earlier than the agreed term and the

ability of the debtor to settle its obligation on the amended terms; and

it is probable that an outflow of resources embodying economic benefits or service potential will be required to

settle the obligation; and

Future events that may affect the amount required to settle an obligation are reflected in the amount of a provision

where there is sufficient objective evidence that they will occur. Gains from the expected disposal of assets are not

taken into account in measuring a provision. Provisions are not recognised for future operating losses. The present

obligation under an onerous contract is recognised and measured as a provision. An onerous contract is a contract

in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected

to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract,

which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it - this

unavoidable cost resulting from the contract is the amount of the provision to be recognised.

26

12. EMPLOYEE BENEFITS

12. 1 Short-term employee benefits

12. 2 Post-employment benefits




Employee benefits are all forms of consideration given by an municipality in exchange for service rendered by

employees.

The cost of all short-term employee benefits (those payable within 12 months after the service is rendered, such as

paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care) is recognised during

the period in which the employee renders the related service and are not discounted. The Municipality recognises the

expected cost of performance bonuses only when the Municipality has a present legal or constructive obligation to

make such payment, and a reliable estimate can be made. The Municipality provides long-term incentives to eligible

employees, payable on completion of years of employment. The Municipality’s liability is based on an actuarial

valuation. The projected unit credit method has been used to value the obligation. Actuarial gains and losses on the

long-term incentives are accounted for through the Statement of Financial Performance. The expected cost of

compensated absences is recognised as an expense as the employees render services that increase their

entitlement or, in the case of non-accumulating absences, when the absence occurs.

Post-employment benefits are employee benefits (other than termination benefits) which are payable after the

completion of employment.

Post-employment benefit plans are formal or informal arrangements under which a municipality provides post-

employment benefits for one or more employees.

The Municipality provides retirement benefits for its employees and councillors. Defined contribution plans are post

employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund) and will have

no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all

employee benefits relating to employee service in the current and prior periods. The contributions to fund obligations

for the payment of retirement benefits are charged against income in the year they become payable. Payments made

to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where

the entity’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit

plan.

27

12. EMPLOYEE BENEFITS (continued)

Defined benefit plans


The Municipality provides post-retirement benefits by subsidising the medical aid contributions of certain retired staff.

According to the rules of the medical aid funds with which the Municipality is associated, a member on retirement, is

entitled to remain a continued member of such medical aid fund and the Municipality will continue to subsidise

medical contributions in accordance with the provisions of the employee’s employment contract and the Municipality

decision on protected rights. Post-retirement medical contributions paid by the Municipality and depending on the

employee’s contract could either be 70%, 60% or a subsidy indicated on a sliding-scale basis. The employee is

responsible for the balance of post-retirement medical contribution in each case. External appointments do not

qualify for a post-retirement medical aid subsidy. These contributions are charged to the operating account when

employees have rendered the service entitling them to the contribution. The liability in respect of current pensioners

is regarded as fully accrued, and is therefore not split between a past (or accrued) and future in-service element. The

liability is recognised at the fair value of the obligation.The entitlement to post-retirement health care benefits is

based on the employee remaining in service up to retirement age and the completion of a minimum service period.

The expected costs of these benefits are accrued over the period of employment. Independent qualified actuaries

carry out valuations of these obligations. For defined benefit plans the cost of providing the benefits is determined

using the projected credit method. Consideration is given to any event that could impact the funds up to end of the

reporting period where the interim valuation is performed at an earlier date. Past service costs are recognised

immediately to the extent that the benefits are already vested, and are otherwise amortised on the straight line basis

over the average period until the amended benefits become vested. Gains or losses on the curtailment or settlement

of a defined benefit plan are recognised when the entity is demonstrably committed to curtailment or settlement.

When it is virtually certain that another party will reimburse some or all of the expenditure required to settle a defined

benefit obligation, the right to reimbursement is recognised as a separate asset. The asset is measured at fair value.

The amount recognised in the statement of financial position represents the present value of the defined benefit

obligation. Any asset is limited to unrecognised actuarial losses and past service costs, plus the present value of

available refunds and reduction in future contributions to the plan.


Actuarial gains and losses comprise experience adjustments (the effects of differences between the previous

actuarial assumptions and what has actually occurred) and the effects of changes in actuarial assumptions. In

measuring its defined benefit liability the municipality recognise actuarial gains and losses in surplus or deficit in the

reporting period in which they occur.


Defined benefit plans are post-employment benefit plans other than defined contribution plans.

28

13.

14.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a

commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows

from other assets or groups of assets.

Borrowing costs are recognised as an expense in the period in which they are incurred.

IMPAIRMENT


Criteria developed by the municipality to distinguish cash-generating assets from non-cash-generating assets are as

follows:

▪ The municipality has looked at the definition of cash generating assets which determine that an asset can be

identified as cash generating asset if there is a commercial return.

▪ The municipality do not operate in a profit-oriented manner and the main focus is to provide a service therefor all

the assets will be classified as non-cash-generating assets.

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic

recognition of the loss of the asset’s future economic benefits or service potential through depreciation

(amortisation).

Recoverable amount of an asset or a cash-generating unit is the higher its fair value less costs to sell and its value in

use.

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting

any accumulated depreciation and accumulated impairment losses thereon.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction

between knowledgeable, willing parties, less the costs of disposal.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and

income tax expense.



Useful life is either:

▪ the period of time over which an asset is expected to be used by the municipality; or

▪ the number of production or similar units expected to be obtained from the asset by the municipality.

Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.

Cash-generating assets are those assets held by the municipality with the primary objective of generating a

commercial return. When an asset is deployed in a manner consistent with that adopted by a profit-orientated entity,

it generates a commercial return.

BORROWING COST

29

14.

14. 1 Impairment of Cash generated Assets

14. 2 Impairment of Non-Cash generated assets



as follows:

▪ To the assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.

▪ The municipality assesses at each reporting date whether there is any indication that an impairment loss

recognised in prior periods for assets may no longer exist or may have decreased. If any such indication exists, the

recoverable amounts of those assets are estimated.



periods. A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation is

recognised immediately in surplus or deficit.


A value in use of a cash generating asset is the presentation of the estimated future cash flows expected to be

derived from the continuing use of an asset and from its disposal at the end of its useful life.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to

its recoverable amount. That reduction is an impairment loss. An impairment loss of assets carried at cost less any

accumulated depreciation or amortisation is recognised immediately in surplus or deficit.



any such indication exists, the municipality estimates the recoverable amount of the individual asset. If it is not

possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash generating

unit to which the asset belongs is determined.

IMPAIRMENT(continued)


The recoverable service amount is the higher of a non-cash generating asset's fair value less costs to sell and its

value in use. The value in use for a non-cash generating asset is the present value of the asset’s remaining service

potential. If the recoverable service amount of an asset is less than its carrying amount, the carrying amount of the

asset is reduced to its recoverable service amount. That reduction is an impairment loss. An impairment loss of

assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in surplus or

deficit in the statement of financial performance. The value in use is determined using the depreciated replacement

cost approach.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its

value in use. The best evidence of fair value less cost to sell is the price in a binding sale agreement in an arm

length transaction, adjusted for the incremental cost that would be directly attributed to the disposal of the assets.


any such indication exists, the municipality estimates the recoverable service amount of the asset. If it is not possible

to estimate the recoverable service amount of the individual asset, the recoverable service amount of the cash-

generating unit to which the asset belongs is determined.



as follows:

▪ To the assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.



service amounts of those assets are estimated.

30

15.

15. 1. Initial Recognition

15. 2. Subsequent measurement

16.

17. VALUE ADDED TAX

The Municipality accounts for Value Added Tax on the payment basis in accordance with section 15(2)(a) of the

Value Added Tax Act (Act No 89 of 1991)

HERITAGE ASSETS

The cost of an item of heritage assets is recognised as an asset if, and only if it is probable that future economic

benefit or service potential associated with the item will flow to the municipality, and if the cost or fair value of the

item can measured reliably.


GRANTS-IN-AID

The municipality transfers money to individuals, organisations and other sectors of government from time to time.

When making these transfers, the municipality does not:

receive any goods or services directly in return, as would be expected in a purchase or sale transaction;

▪ expect to be repaid in future; or

▪ expect a financial return, as would be expected from an investment.

These transfers are recognised in the Statement of Financial Performance as expenses in the period that the events

giving rise to the transfer occurred.

Where an heritage asset is acquired by the municipality for no or nominal consideration (i.e. a non-exchange

transaction), transaction is deemed to be equal to the fail value of that asset on the date acquired.

Heritage assets are initially recognised at cost on its acquisition date or in the case of assets acquired by grant of

donation, deemed cost, being the fair value of the asset on initial recognition. The cost of an item of heritage asset

purchases price and other costs attributable to bring the asset to the location and condition necessary for it to be call

operating in the manner intended by the municipality. Trade discounts and rebates are deducted in arriving at the

cost. The cost also included the necessary costs of dismantling and removing the asset and restoring the site on

which it is located.

An heritage asset is defined as an asset that has a cultural, environmental, historical, natural, scientific, technological

artistic significance, and is held and preserved indefinitely for the benefit of present and future generations.


The cost of an item of heritage assets acquired in exchange for non-monetary assets or monetary assets, or a

combination of monetary and non-monetary assets is measured at the fair value of the asset given up, unless the

value of the asset received is more clearly evident. If the acquired item could not be measured at its fair value, its

measured at the carrying amount of the asset given up.

Subsequent expenditure relating to heritage assets capitalised if it is probable that future economic benefits of

potential service delivery associated with the subsequent expenditure will flow to the municipality and the cost of fair

value of the subsequent expenditure can be reliably measured. Subsequent expenditure incurred on an asset is only

capitalise it increase the capacity or future economic benefits associated with the asset. Where the municipality

replaces part of an heritage asset, it derecognises the part of the asset being replaced and capitalises the new

component.

Subsequently all the heritage assets are measured at cost less accumulated impairment losses. Heritage assets are

not depreciated, owing to uncertainty regarding to their estimated useful lives.


31

18.

19.

20.

21.

Fruitless and wasteful expenditure are expenditure described as per the Municipal Finance Management Act.

TREATMENT OF ADMINISTRATION AND OTHER OVERHEAD EXPENSES

The cost of internal support are transferred to the various services and departments to who resources are made

available.

IRREGULAR EXPENDITURE

Irregular expenditure as defined in section 1 of the MFMA is expenditure other than unauthorised expenditure,

incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including

(a) MFMA number 56 of 2003

(b) Public Office Bearers Act (Act No. 20 of 1998

Irregular expenditure that was incurred and identified during the current financial and which was condoned before

year end and/or before finalisation of the financial statements must also be recorded appropriately in the irregular

expenditure register. In such an instance, no further action is also required with the exception of updating the note to

the financial statements.

Irregular expenditure that was incurred and identified during the current financial year and for which condonenment is

being awaited at year end must be recorded in the irregular expenditure register. No further action is required with

the exception of updating the disclosure note to the financial statements.

Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial

year, the register and the disclosure note to the financial statements must be updated with the amount condoned.

Irregular expenditure that was incurred and identified during the current financial year and which was not condoned

by the National Treasury or the relevant authority must be recorded appropriately in the irregular expenditure

register. If liability for the irregular expenditure can be attributed to a person, a debt account must be created if such

a person is liable in law. Immediate steps must thereafter be taken to recover the amount from the person

concerned. If recovery is not possible, the accounting officer or accounting authority may write off the amount as

debt impairment and disclose such in the relevant note to the financial statements. The irregular expenditure register

must also be updated accordingly. If the irregular expenditure has not been condoned and no person is liable in law,

the expenditure related thereto must remain against the relevant programme/expenditure item, must be disclosed as

such in the note to the financial statements and updated accordingly in the irregular expenditure register.

FRUITLESS AND WASTEFUL EXPENDITURE

UNAUTHORISED EXPENDITURE

Unauthorised expenditure is expenditure that has not been budgeted for expenditure that is not in terms of the

conditions of an allocation received from another sphere of government, municipality or organ of state and

expenditure in the form of a grant that is not permitted in terms of the Municipal Finance Management Act (Act No 56

of 2003). Unauthorised expenditure is accounted for as an expense in the Statement of Financial Performance. If the

expenditure is not condoned by the Council it is treated as an asset until it is recovered or written off as

irrecoverable.




32

22.

23.

24.

25.

26.

When the presentation or classification of items in the Annual Financial Statements is amended, prior period

comparative amounts are reclassified. The nature and reasons for the reclassification are disclosed.

CONTINGENT ASSETS AND CONTINGENT LIABILITIES

Contingent liabilities represent a possible obligation that arises from past events and whose existence will be

confirmed only by an occurrence or non-occurrence of one or more uncertain future events not wholly within the

control of the entity. A contingent liability can also arise as a result of a present obligation that arises from past

events but which is not recognised as a liability either because it is not probable that an outflow of resources

embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be

measured with sufficient reliability.

Contingent assets represent possible assets that arise from past events and whose existence will be confirmed only

by an occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in the notes to the

annual financial statements.




RELATED PARTIES

Individuals as well as their close family members, and/or entities are related parties if one party has the ability,

directly or indirectly, to control or jointly control the other party or exercise significant influence over the other party in

making financial and/or operating decisions. Key management personnel is defined as the Municipal Manager, Chief

Financial Officer and all other managers reporting directly to the Municipal Manager or as designated by the

Municipal Manager.

TRANSLATION TO FOREIGN CURRENCIES

Transactions in foreign currencies are initially recorded at the prevailing exchange rate on the dates of the

transactions. Monetary assets and liabilities denominated in such foreign currencies are retranslated at the rates

prevailing at the reporting date. Exchange differences are included in the Statement of Financial Performance.

COMPARATIVE FIGURES

Correction of errors is applied retrospectively in the period in which the error has occurred in accordance with

GRAP 3 requirements, except to the extent that it is impracticable to determine the period-specific effects or the

cumulative effect of the error. In such cases the municipality shall restate the opening balances of assets, liabilities

and net assets for the earliest period for which retrospective restatement is practicable. Refer to the notes to the

Annual Financial Statements for details of corrections of errors recorded during the period under review.

CHANGES IN ACCOUNTING POLICIES, ESTIMATES AND ERRORS

Changes in accounting policies that are effected by management have been applied retrospectively in accordance

with GRAP 3 requirements, except to the extent that it is impracticable to determine the period-specific effects or the

cumulative effect of the change in policy. In such cases the municipality shall restate the opening balances of assets,

liabilities and net assets for the earliest period for which retrospective restatement is practicable. Refer to notes for

details of changes in accounting policies.

Changes in accounting estimates are applied prospectively in accordance with GRAP 3 requirements. Details of

changes in estimates are disclosed in the notes to the annual financial statements where applicable.

33

27.

Commitments are future expenditure to which the municipality committed and that will result in the outflow of

resources. Commitments are not recognised in the statement of financial position as a liability or as expenditure in

the statement of financial performance but are included in the disclosure notes. Only capital commitments are

disclosed.

Commitments are disclosed for:

▪ Approved and contracted commitments, where the expenditure has been approved and the contract has been

awarded at the reporting date.

▪ Items are classified as commitments where the municipality commits itself to future transactions that will normally

result in the outflow of resources.

▪ Contracts that are entered into before the reporting date, but goods and services have not yet been received are

disclosed in the disclosure notes to the financial statements.

COMMITMENTS




34

2017 2016

R R

1. GENERAL INFORMATION

2. INVENTORY

Inventory Stores - at cost 23,328,719 23,721,734

Inventory Land 6,637,717 6,637,302

Water - at cost 1,969,225 2,297,043 Total Inventory 31,935,661 32,656,079

0.00 0.00

69,293 102,234

41,586,315 51,445,219

3. ASSETS HELD-FOR-SALE

Other Assets Held-for-Sale - 141,858 Net Assets classified as Held-for-Sale - 141,858

4. TRADE RECEIVABLES FROM EXCHANGE TRANSACTIONS

Gross Provision for Net

Balances Impairment Balances

As at 30 June 2017

Service Debtors: 1,344,595,173 907,081,501 437,513,672

Electricity 173,190,982 116,836,903 56,354,079

Refuse 79,551,392 53,666,410 25,884,982

Sewerage 100,695,127 67,930,251 32,764,877

Water 371,506,224 250,622,960 120,883,263

Miscellaneous 619,651,448 418,024,977 201,626,472

Market 940,424 634,422 306,002

Housing Debtors 36,495,750 24,620,511 11,875,240

Total Consumer Debtors 1,382,031,347 932,336,434 449,694,913

Non current portion (2,147,432) (2,147,432)



NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2017

Sol Plaatje Local Municipality (the municipality) is a local government institution in Kimberley, Northern Cape. The addresses of its

registered office and principal place of business are disclosed under "General Information" included in the Annual Financial Statements.

The principal activities of the municipality are prescribed by The Constitution.

The net realisable value of the above water inventory is seen as higher than the cost as

stipulated above.

The cost of Inventories recognised as an expense (included in general expenses) in respect

of write downs of Inventory to Net Realisable Value and which was approved by Council

amounted to:

The cost of Inventories recognised as an expense during the period was:

The municipality intends to dispose some of its Property, Plant and Equipment through public

auction within the next twelve months.

Included in the property, plant and equipment figure on the balance sheet, are the following

amounts relating to non current assets that is intended for sale within the next 12 months:

35

4. TRADE RECEIVABLES FROM EXCHANGE TRANSACTIONS (Continued)

Gross Provision for Net

Balances Impairment Balances

As at 30 June 2016

Service Debtors: 1,081,906,567 757,824,059 324,082,508

Electricity 146,226,816 102,424,925 43,801,891

Refuse 66,537,548 46,606,386 19,931,162

Sewerage 83,151,479 58,243,653 24,907,825

Water 299,942,067 210,095,143 89,846,924

Miscellaneous 486,048,657 340,453,952 145,594,705

Market 1,016,680 712,136 304,544

Housing Debtors 31,919,155 22,357,849 9,561,306

Total Consumer Debtors 1,114,842,402 780,894,044 333,948,358 Non current portion (1,491,884) (1,491,884)


2017 2016

R R

4.1 Ageing of Consumer Debtors

Electricity: Ageing

Current:

0 - 30 days 49,530,799 44,482,933

Past Due:

31 - 60 Days 7,931,799 10,772,722

61 - 90 Days 14,649,786 6,729,244

+ 90 Days 101,078,599 84,241,917 Total 173,190,982 146,226,816

- -

Refuse: Ageing

Current:

0 - 30 days 3,366,035 3,076,271

Past Due:

31 - 60 Days 2,106,457 1,944,857

61 - 90 Days 1,906,376 1,753,113

+ 90 Days 72,172,524 59,763,308 Total 79,551,392 66,537,548

- -

Sewerage: Ageing

Current:

0 - 30 days 4,433,100 3,870,807

Past Due:

31 - 60 Days 2,866,802 2,601,184

61 - 90 Days 2,571,992 2,341,250

+ 90 Days 90,823,234 74,338,238 Total 100,695,127 83,151,479

-


The municipality receives applications that it processes. Deposits are required to be paid for all water accounts opened. There are no

consumers who represent more than 5% of the total balance of Consumer Debtors. The Municipality does not require collateral in respect

of trade and other receivables, except for consumer deposits made by consumers with the connection of water and electricity services.


Consumer Debtors are billed monthly, latest end of month. No interest is charged on trade receivables for the first 30 days from the date

of the invoice. Thereafter interest is charged at a rate determined by council on the outstanding balance. The municipality strictly enforces

its approved credit control policy to ensure the recovery of Consumer Debtors. Miscellaneous consist mainly out of interest charged on

outstanding debtors and VAT on all services.

The management of the municipality is of the opinion that the carrying value of Consumer Debtors approximate their fair value.

36

2017 2016

R R

4. TRADE RECEIVABLES FROM EXCHANGE TRANSACTIONS (Continued)

Water: Ageing

Current:

0 - 30 days 28,532,984 23,658,950

Past Due:

31 - 60 Days 13,483,129 10,323,460

61 - 90 Days 12,230,112 9,452,509

+ 90 Days 317,260,000 256,507,149 Total 371,506,224 299,942,067

- -

Miscellaneous: Ageing

Current:

0 - 30 days 24,686,185 23,361,441

Past Due:

31 - 60 Days 16,579,867 16,499,835

61 - 90 Days 17,120,894 14,390,590

+ 90 Days 562,204,926 432,813,471 Total 620,591,872 487,065,337

- 0.00

Housing Rentals: Ageing

Current:

0 - 30 days 510,321 508,105

Past Due:

31 - 60 Days 463,284 466,946

61 - 90 Days 458,790 462,173

+ 90 Days 35,063,356 30,481,931 Total 36,495,750 31,919,155

- -

4.2 Summary of Consumer Debtors by Customer Classification (Exchange and Non-Exchange Transactions)

National and

Industrial/ Provincial

Household Commercial Government Total

R R R R

As at 30 June 2017

Current:

0 - 30 days 72,551,262 39,656,134 16,742,197 128,949,593

Past Due:

31 - 60 Days 30,728,231 10,452,786 10,826,255 52,007,272

61 - 90 Days 28,337,682 18,634,600 9,855,071 56,827,353

+ 90 Days 953,008,846 211,104,787 538,295,189 1,702,408,822

Sub-total 1,084,626,021 279,848,307 575,718,712 1,940,193,040

Less: Provision for Impairment 529,660,652 136,659,673 281,143,494 947,463,819 Total Debtors by Customer Classification 554,965,368 143,188,634 294,575,218 992,729,221

As at 30 June 2016

Current:

0 - 30 days 76,030,180 33,520,069 11,375,774 120,926,023

Past Due:

31 - 60 Days 29,842,001 10,603,408 31,772,008 72,217,417

61 - 90 Days 28,701,610 8,265,053 5,145,808 42,112,471

+ 90 Days 772,656,236 159,661,371 419,922,437 1,352,240,044

Sub-total 907,230,027 212,049,901 468,216,027 1,587,495,955

Less: Provision for Impairment 450,902,073 105,390,846 232,707,881 789,000,801 Total Debtors by Customer Classification 456,327,954 106,659,055 235,508,146 798,495,154

NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2017SOL PLAATJE LOCAL MUNICIPALITY

The amount for debtors past due more than the impairment loss provided for is seen as recoverable therefore no impairment loss has

been provided for this excess amount. Management is of the opinion that the current debtors is fully recoverable.

37

2017 2016

R R

Balance at beginning of year 789,000,801 648,584,757

Impairment Loss recognised 192,872,291 161,570,809

Impairment Losses reversed - -

Amounts written off as uncollectable (34,409,273) (21,154,765)

Amounts reversed - - Balance at end of year 947,463,819 789,000,801

0.00 0.00

4.4 Ageing of impaired Consumer Debtors

0 - 30 Days 4,609,663 3,838,699

31 - 60 Days 3,516,175 2,928,096

61 - 90 Days 3,073,157 2,559,173

+ 90 Days 936,264,823 779,674,834

Total 947,463,819 789,000,801

- -

5. TRADE RECEIVABLES FROM NON-EXCHANGE TRANSACTIONS

Assessment Rates 558,161,692 472,653,553

Government Subsidy Claims 58,595,814 47,423,409

Miscellaneous debtors 5,862,505 7,143,930

Traffic Fines 20,860,350 12,943,572

643,480,362 540,164,464

Less: Provision for Impairment (15,127,385) (8,106,756)

Total Other Debtors 628,352,977 532,057,708

Non current portion (1,177,081) (157,151)

Total Other Debtors 627,175,896 531,900,557

- -

5.1 Ageing of Consumer Debtors

Rates: Ageing

Current:

0 - 30 days 21,646,562 21,967,517

Past Due:

31 - 60 Days 8,551,913 29,608,414

61 - 90 Days 7,666,781 6,983,591

+ 90 Days 520,296,437 414,094,030 Total 558,161,692 472,653,553

- -

6. CASH AND CASH EQUIVALENTS

Cash and Cash Equivalents 201,931,958 224,932,658

Bank 24,629,446 34,343,040

Total Cash and Cash Equivalents 226,561,404 259,275,698

- -


For the purposes of the Statement of Financial Position and the Cash Flow Statement, Cash

and Cash Equivalents include Cash-on-Hand and Cash in Banks, net of outstanding Bank

Overdrafts.

Management of the municipality is of the opinion that the carrying value of trade receivables

from non-exchange transactions approximate their fair value.

The average credit period for Government Grants and Subsidies is dependent on the

Government Department involved and the nature of the claim. No interest is charged on

outstanding Government Grants and Subsidies. The subsidies is payable to the municipality

due to allocations made in the DORA or based on agreements between the municipality and

the relevant departments.

4.3 Reconciliation of the Provision for Impairment


In determining the recoverability of debtors, the municipality has placed strong emphasis on

verifying the indigent status of consumers. Provision for impairment of Consumer Debtors

has been made for all consumer balances outstanding based on the payment ratio over 12

months per service type. No further credit provision is required in excess of the Provision for

Impairment.

38

2017 2016

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6. CASH AND CASH EQUIVALENTS (Continued)

Call Deposits 87,950,000 90,950,000

Notice Deposits 113,965,838 133,965,838 Total Current Investment Deposits 201,915,838 224,915,838

224,915,838

Cash book balance

Cash book balance at beginning of year 34,343,040 17,559,969 Cash book balance at end of year 24,629,446 34,343,040

24,629,446 34,343,040

The following disclosures in terms of Municipal Finance Management Act (MFMA) section 125 2(a):

Current Account (Primary Bank Account)

The Municipality has the following main bank account:

Standard Bank Kimberley Old Main Road

Account Number 040065367

Primary Bank account 040065367

Bank statement balance at beginning of year / (overdrawn) 78,334,651 51,073,577

Bank statement balance at end of year / (overdrawn) 37,727,821 78,334,651

Sub account -Resort 040039072

Bank statement balance at beginning of year / (overdrawn) - -

Bank statement balance at end of year / (overdrawn) - -

Sub account -Traffic 040036340



Sub account -Stores 040065405



Sub account -Salary 040065391



Sub account -Market 040065383



Notice Deposits are investments with a maturity period of less than 12 months and earn

interest rate varying from 7.475% to 8.2% per annum.

Call Deposits are investments with a maturity period of less than 3 months and earn interest

rates varying from 5.3% to 7.55% per annum.


6.2 Bank Accounts


Interest on overdrawn current accounts are charged at the bank's prime rate per annum.

Interest is earned at different rates per annum on favourable balances.

6.1 Current Investment Deposits

A fixed deposit of R20,973,203 (2016: R20,973,203) was invested and ceded to Development

Bank of South Africa representing the equivalent of one instalment of a loan taken up during

the current financial year.

A fixed deposit of R2,992,635 (2016: R2,992,635) was made as a security to the Self-

Insurance Workman Compensation reserve as required by the Department of Labour -

Compensation Commissioner.

39

2017 2016

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6. CASH AND CASH EQUIVALENTS (Continued)

Cash Floats and Advances 16,120 16,820 Cash on hand in Cash Floats, Advances and Equivalents 16,120 16,820

16,120 16,820

7. OPERATING LEASE ASSETS / RECEIVABLES

Balance as at 30 June 34,999 72,186

Operating Lease expenses recorded - 619,803

Operating Lease payments effected (34,999) (656,990) Total Operating Lease Assets - 34,999

0.00 0.00

7.1 Leasing Arrangements

The Municipality as Lessor:

389,168 418,498

7.2 Amounts receivable under Operating Leases

Up to 1 year 677,187 588,506

2 to 5 years 1,143,678 1,113,889

More than 5 years 722,416 56,000 Total Operating Lease Arrangements 2,543,280 1,758,396

- 37,186

8. VAT RECEIVABLE FROM EXCHANGE TRANSACTIONS

8,306,419 10,337,965

0.00 0.00


(iii) The lessee shall use the premises let for the sole purpose prescribed in the agreement.

(ii) The lessor or its duly authorised agent, representative or servant shall have the right at all

reasonable times to inspect the premises let.

Vat is payable on the payment basis. Only once payment is received from debtors, VAT is

paid over to SARS. No interest is payable to SARS if the VAT is paid over timeously, but

interest for late payments is charged according to SARS policies. The municipality has

financial risk policies in place to ensure that payments are affected before the due date.

Vat Receivable from Exchange Transactions

(i) The lessee shall not have the right to sublet, cede or assign the whole or any portion of

the premises let.

6.3 Cash and Cash equivalents

The following restrictions have been imposed by the municipality in terms of its lease

agreements:

At the Reporting Date the following minimum lease payments were receivable under Non-

cancellable Operating Leases for Property, Plant and Equipment, which are receivable as

follows:

Rental Revenue earned from Investment Property

Operating Leases relate to property owned by the municipality with lease terms of between 1

to 10 years. The lessees do not have an option to purchase the property at the expiration of

the lease period. Operating lease contracts contain market review clauses in the event that

the lessee exercises its option to renew.

Operating Leases are recognised on the straight-line basis as per the requirement of GRAP

13. In respect of Non-cancellable Operating Leases the following assets have been

recognised:

The impact of charging the escalations in Operating Leases on a straight-line basis over the

term of the lease for the year has been an increase:

The management of the municipality is of the opinion that the carrying value of Bank

Balances, Cash and Cash Equivalents recorded at amortised cost in the Annual Financial

Statements approximate their fair value.

40

9. PROPERTY, PLANT AND EQUIPMENT

30 June 2017

Reconciliation of Carrying Value

Infra-

Community Heritage Other Total

structure

R R R R R

Carrying values at 01 July 2016 1,073,718,409 286,848,957 8,648,295 62,876,258 1,432,091,918

Cost 1,511,779,588 343,727,376 8,648,295 143,808,401 2,007,963,660

- Completed Assets 1,187,453,646 339,134,919 6,801,944 143,808,401 1,677,198,910

- Under Construction 324,325,943 4,592,458 1,846,350 - 330,764,751

Accumulated Depreciation: (438,061,180) (56,878,420) - (80,932,143) (575,871,743)

- Cost (438,061,180) (56,878,420) - (80,932,143) (575,871,743)

Acquisitions 58,016,600 24,416,166 - 9,185,349 91,618,114

Capital under Construction - Additions 24,979,785 - - - 24,979,785

- Cost 24,979,785 - - - 24,979,785

Depreciation: (32,160,492) (7,505,831) - (13,984,550) (53,650,872)

- Based on Cost (32,160,492) (7,505,831) (13,984,550) (53,650,872)

Adjustment of Carrying values: (558,432) - - (613,946) (1,172,378)

- Cost (558,432) - (613,946) (1,172,378)

Adjustment of Depreciation 268,783 268,783

Capital under Construction - Completed (218,898,154) (5,219,567) - (224,117,721)

Other Movements 215,589,217 5,219,567 - - 220,808,785

- Cost 218,898,154 5,219,567 - 224,117,721

- Accumulated Impairment Losses (3,308,937) (3,308,937)

Carrying values at 30 June 2017 1,120,955,717 303,759,291 8,648,295 57,463,110 1,490,826,413

Cost 1,594,217,542 368,143,542 8,648,295 152,379,804 2,123,389,182


- Under Construction 130,407,574 (627,110) 1,846,350 - 131,626,815

Accumulated Impairment Loss (3,308,937) - - - (3,308,937)


- Cost (469,952,888) (64,384,250) - (94,916,693) (629,253,832)

0.00 0.0000 0.00 0.00 0.00

30 June 2016

Reconciliation of Carrying Value

Infra-

Community Heritage Other Total

structure

R R R R R

Carrying values at 01 July 2015 978,452,243 287,289,487 6,801,944 69,409,041 1,341,952,715

Cost 1,385,131,919 336,776,248 6,801,944 133,775,273 1,862,485,384 - Completed Assets 1,106,255,128 325,899,302 6,801,944 133,775,273 1,572,731,648

- Under Construction 278,876,791 10,876,946 - - 289,753,736


- Cost (406,679,677) (49,486,761) - (64,366,232) (520,532,669)

Correction of error (Note 39)

- Accumulated Depreciation - - - -

Restated carrying values at 01 July 2015 978,452,243 287,289,487 6,801,944 69,409,041 1,341,952,715

Acquisitions 29,663,121 5,055,178 - 10,033,128 44,751,427

Capital under Construction - Additions 97,053,191 1,895,950 1,846,350 - 100,795,491

- Cost 97,053,191 1,895,950 1,846,350 - 100,795,491

Depreciation: (31,450,145) (7,391,659) - (16,565,912) (55,407,716)

- Based on Cost (31,450,145) (7,391,659) - (16,565,912) (55,407,716)

Adjustment of Carrying values: (68,642) - - - (68,642)

- Cost (68,642) - - - (68,642)

Adjustment of Depreciation 68,642 68,642

Capital under Construction - Completed (51,604,039) (8,180,438) - - (59,784,477)

Other Movements 51,604,039 8,180,438 - - 59,784,477

- Cost 51,604,039 8,180,438 - - 59,784,477

Carrying values at 30 June 2016 1,073,718,409 286,848,957 8,648,295 62,876,258 1,432,091,918

Cost 1,511,779,588 343,727,376 8,648,295 143,808,401 2,007,963,660


- Under Construction 324,325,943 4,592,458 1,846,350 - 330,764,751


- Cost (438,061,180) (56,878,420) - (80,932,143) (575,871,743)

0.00 0.00 0.00 0.00

Refer to Appendices "B, C and E (2)" for more detail on Property, Plant and Equipment, including those in the course of construction.

SOL PLAATJE LOCAL MUNICIPALITYNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2017

Description

Description

41

2017 2016

R R

9. PROPERTY, PLANT AND EQUIPMENT (Continued)

9.1 Carrying Amount of Property, Plant and Equipment temporarily idle:

57,855 79,217

9.2 Heritage Assets

Land 6,765,789 6,765,789

Antiques 36,156 36,156

Monuments 1,846,350 1,846,350

Total 8,648,295 8,648,295

9.3 Work in Progress (WIP) - Projects significantly delayed

27,392,290

12,022,391

10. INTANGIBLE ASSETS

At Cost less Accumulated Amortisation and Accumulated Impairment Loss 3,825,728 6,299,418

0.00 0.00

Computer Total

Software

Carrying values at 01 July 2016 6,299,418 6,299,418

Cost 20,970,925 20,970,925

Accumulated Amortisation (14,671,507) (14,671,507)

Acquisitions during the Year: 2,366,004 2,366,004

Purchased 2,366,004 2,366,004

Amortisation during the Year: (4,839,694) (4,839,694)

Purchased (4,839,694) (4,839,694)

Carrying values at 30 June 2017 3,825,728 3,825,728

Cost 23,336,929 23,336,929


0.00 0.00 0.00 0.00

Computer Total

Software

Carrying values at 01 July 2015 4,698,938 4,698,938

Cost 17,203,992 17,203,992


Acquisitions during the Year: 3,766,933 3,766,933

Purchased 3,766,933 3,766,933

Amortisation during the Year: (2,166,453) (2,166,453)

Purchased (2,166,453) (2,166,453)

Carrying values at 30 June 2016 6,299,418 6,299,418

Cost 20,970,925 20,970,925


0.00 0.00 0.00 0.00

The project relating to the Ritchie Bulk Water augmentation has been delayed due to challenges

experienced with the funding of this project.

Included in the work in progress balance is the following amount pertaining to the Riverton high lift

pumps. This project has been siginifcantly delayed due to the fact that the pump station building

needed to be refurbished to enable the fitting of the pumps.

Heritage assets disclosed in the financial statements consist of the following:

The municipality identified certain categories of assets that can be classified as Heritage Assets. Due

to the recognition criteria as set out in GRAP 103, these assets do not qualify to be recognised as the

cost or fair value thereof cannot be measured reliably. Furthermore, the municipality cannot with

certainty say that future economic benefits or service potential attributable to the heritage asset will

flow to the municipality. These categories are: Municipal Jewellery, Antique Paintings, Areas of land of

historic or specific significance and Monuments.



The amortisation expense has been included in the line item "Depreciation and Amortisation" in the Statement of Financial Performance (see Note 31).

The movement in Intangible Assets is reconciled as follows:

All of the municipality’s Intangible Assets are held under freehold interests and no Intangible Assets had been pledged as security for any liabilities of the

municipality.

No restrictions apply to any of the Intangible Assets of the municipality.

An element of plant of the Municipality is currently temporarily not in use. The carrying amount of this

asset, which is included in the reconciliation of the carrying value of Property, Plant and Equipment as

above, is as follows:

42

2017 2016

R R

11. INVESTMENT PROPERTY

At Cost less Accumulated Depreciation 195,886,029 196,328,319

0.00 0.00

Carrying values at 1 July 196,328,319 194,623,613

Cost 197,972,781 196,050,193

Accumulated Depreciation (1,644,461) (1,426,580)

Acquisitions during the Year 115,400 2,336,988

Depreciation during the Year (217,286) (217,882)

Disposals during the Year: (340,404) (414,400)

At Cost (340,404) (414,400)

Transfers during the Year: - -

At Cost - -

Carrying values at 30 June 195,886,029 196,328,319

Cost 197,747,777 197,972,781

Accumulated Depreciation (1,861,748) (1,644,461)

0.00 0.00

Estimated Fair Value of Investment Property at 30 June 197,747,777 198,016,169

389,168 418,498

There are no contractual obligations on Investment Property.

12. LONG-TERM RECEIVABLES

13. CONSUMER DEPOSITS

Electricity and Water 29,969,181 28,820,246

Total Consumer Deposits 29,969,181 28,820,246

0.00 0.00

Guarantees held in lieu of Electricity and Water Deposits 3,457,193 3,457,988


Staff were previously entitled to loans from the Municipality. This practice has been phased out by the Municipality in terms of the requirements of the

MFMA. Subsequent to this change in policy, all loans have been repaid.

There are no restrictions on the realisability of Investment Property or the remittance of revenue and

proceeds of disposal.

Consumer Deposits are paid by consumers on application for new water and electricity connections.

The deposits are repaid when the water and electricity connections are terminated. In cases where

consumers default on their accounts, the municipality can utilise the deposit as payment for the

outstanding account. No interest is paid on Consumer Deposits held.

The management of the municipality is of the opinion that the carrying value of Consumer Deposits

approximate their fair value.


The movement in Investment Property is reconciled as follows:

All of the municipality’s Investment Property is held under freehold interests and no Investment

Property had been pledged as security for any liabilities of the municipality.

Revenue and Expenditure disclosed in the Statement of Financial Performance include: Rental

Revenue earned from Investment Property

43

2017 2016

R R

14. PROVISIONS

Current Portion of Post-retirement Medical Aid Benefits Liability (See Note 19 below) 7,007,261 6,298,572

Current Portion of Non-Current Provisions (See Note 20 below): 2,500,064 2,396,929

Total Provisions 9,507,325 8,695,501

15. CREDITORS

Trade Creditors 95,338,281 102,525,669

Payments received in Advance 16,414,735 16,392,940

Staff Bonuses 10,270,236 9,911,283

Other Creditors 1,256,734 -

Accrued Leave 33,492,342 32,442,363

Total Creditors 156,772,329 161,272,255

0.00 0.00

16. UNSPENT CONDITIONAL GRANTS AND RECEIPTS

16.1 Conditional Grants from Government 12,349,709 11,012,029

Grants 12,349,709 11,012,029

Total Conditional Grants and Receipts 12,349,709 11,012,029

0.00

17. VAT PAYABLE FROM EXCHANGE TRANSACTIONS

Vat Payable from Exchange Transactions 32,725,353 24,740,958

0.00 0.00


Various immaterial individual creditor balances have been restated for the prior year. Refer to Note

39 on "Correction of Error" for the quantum of the restatement as at 30 June 2016.

See Note 26 for the reconciliation of Grants from Other Spheres of Government. The municipality

complied with the conditions attached to all grants received to the extent of revenue recognised. No

grants were withheld. Refer to Appendix "F" for more detail on Conditional Grants.

Vat is payable on the payment basis. Only once payment is received from debtors, VAT is paid over to

SARS. No interest is payable to SARS if the VAT is paid over timeously, but interest for late payments

is charged according to SARS policies. The municipality has financial risk policies in place to ensure

that payments are affected before the due date.

The management of the municipality is of the opinion that the carrying value of Creditors approximate

their fair value.

The average credit period on purchases is 30 days from the receipt of the invoice, as determined by

the MFMA. No interest is charged for the first 30 days from the date of receipt of the invoice.

Thereafter interest is charged in accordance with the credit policies of the various individual creditors

that the municipality deals with. The municipality has financial risk policies in place to ensure that all

payables are paid within the credit timeframe.


Accrued Leave accrues to the staff of the municipality on a monthly basis, subject to certain

conditions. The accrual is an estimate of the amount due at the reporting date.

44

2017 2016

R R

18. LONG TERM LIABILITIES

Annuity Loans 218,672,802 226,876,321

Sub-total 218,672,802 226,876,321

Less: Current Portion transferred to Current Liabilities:- 8,238,168 8,201,006

Annuity Loans 8,238,168 8,201,006

Total Long-term Liabilities 210,434,634 218,675,316

0.00 0.00

19. RETIREMENT BENEFIT LIABILITIES

19.1 Post-retirement Health Care Benefits Liability

Balance at beginning of Year 224,747,155 174,409,000

Contributions to Provision (6,298,572) (4,928,000)

Expenditure incurred 30,554,474 23,917,000

Actuarial loss/(gain) (41,399,145) 31,349,155

Wholly unfunded balance at year end 207,603,912 224,747,155

Transfer to Current Provisions (7,007,261) (6,298,572)

Total Post-retirement Health Care Benefits Liability 200,596,651 218,448,583

0.00 0.00

In-service (employee) members 1,281 1,263

In-service (employee) non-members 123 428

Continuation Members (retirees and widowers) 208 211

Total Members 1,612 1,902

In-service Members 130,997,809 142,123,728

In-service Non-members 3,393,129 8,404,137

Continuation Members 73,212,974 74,219,290

Total Liability 207,603,912 224,747,155

- Bonitas

- Hosmed

- Key Health

- LA Health

- Samwumed

- Fed Health

The members of the Post-employment Health Care Benefit Plan are made up as follows:

The municipality makes monthly contributions for health care arrangements to the following Medical Aid

Schemes:

The liability in respect of past service has been estimated as follows:

The management of the municipality is of the opinion that the carrying value of Long-term Liabilities recorded at amortised cost in the Annual Financial

Statements approximate their fair values.

The municipality provides certain post-retirement health care benefits by funding the medical aid

contributions of qualifying retired members of the municipality. According to the rules of the Medical

Aid Funds, with which the municipality is associated, a member (who is on the current Conditions of

Service) is entitled to remain a continued member of such medical aid fund on retirement, in which

case the municipality is liable for a certain portion of the medical aid membership fee. The municipality

operates an unfunded defined benefit plan for these qualifying employees. No other post-retirement

benefits are provided to these employees.



The most recent actuarial valuations of plan assets and the present value of the defined benefit

obligation were carried out at 30 June 2017 by C Weiss, Fellow member of the Actuarial Society of

South Africa. The present value of the defined benefit obligation, and the related current service cost

and past service cost, were measured using the Projected Unit Credit Method.

Refer to Appendix "A" for more detail on Long-term Liabilities.

R24,000,000 of the Debtors book as well as an investment of R20,973,203 with Standard Bank have been ceded as security on two loans with the DBSA

.

45

2017 2016

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19. RETIREMENT BENEFIT LIABILITIES (Continued)

Discount Rate 9.20% 9.03%

Health Care Cost Inflation Rate 7.52% 8.14%

Net Effective Discount Rate 1.56% 0.83%

Expected Rate of Salary Increase (ERSI) 3.51% 3.82%

Expected Retirement Age - Females 63 63

Expected Retirement Age - Males 63 63

Balance at the beginning of the year 224,747,155 174,409,000

Current service costs 10,531,193 7,813,000

Interest cost 20,023,281 16,104,000

Benefits paid (6,298,572) (4,928,000)

Actuarial loss/(gain) (41,399,145) 31,349,155

Present Value of Fund Obligation at the end of the Year 207,603,912 224,747,155

Total Recognised Benefit Liability 207,603,912 224,747,155

0.00 0.00

Present value of fund obligations 207,603,912 224,747,155

Total Benefit Liability 207,603,912 224,747,155

0.00 0.00

Current service cost 10,531,193 7,813,000

Interest cost 20,023,281 16,104,000

30,554,474 23,917,000

The history of experienced adjustments is as follows:

2017 2016 2015 2014 2013

R R R R R

Present Value of Defined Benefit

Obligation 207,603,912 224,747,155 174,409,000 190,117,066 162,403,503

Deficit 207,603,912 224,747,155 174,409,000 190,117,066 162,403,503

2017 2016

R R

The effect of a 1% movement in the assumed rate of health care cost inflation is as follows:

Increase:

Effect on the aggregate of the current service cost and the interest cost 31,685,300 24,694,000

Effect on the defined benefit obligation 209,679,951 232,794,000

Decrease:




The amounts recognised in the Statement of Financial Position are as follows:

The amounts recognised in the Statement of Financial Performance are as follows:

Total Post-retirement Benefit included in Employee Related Costs (Note 29)

Refer to Note 49 "Multi-employer Retirement Benefit Information" to the Annual Financial Statements

for more information regarding the municipality's other retirement funds that is Provincially and

Nationally administered.

Movements in the present value of the Defined Benefit Obligation were as follows:


The principal assumptions used for the purposes of the actuarial valuations were as follows:

46

2017 2016

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20. NON-CURRENT PROVISIONS

Provision for Long Service Awards 14,043,746 15,782,694

Provision for Rehabilitation of Land-fill Sites 26,020,747 27,624,298

Total Non-current Provisions 40,064,493 43,406,992

0.00 0.00

The movement in Non-current Provisions are reconciled as follows:

Ex-Gratia

Arrangements

Long Service

AwardsLand-fill Sites

R R R

30 June 2017

Balance at beginning of year - 18,179,623 27,624,298

Current service cost - 2,138,866

Interest cost - 1,415,998

Expenditure incurred / Contribution - (2,396,929) (1,603,551)

Actuarial Loss / (Gain) - (2,793,748) -

- 16,543,810 26,020,747

Transfer to current provisions - (2,500,064)

Balance at end of year - 14,043,746 26,020,747

- - -

30 June 2016

Balance at beginning of year 907,000 18,233,000 27,336,931

Current service cost - 1,968,000 -

Interest cost - 1,510,000 -

Expenditure incurred / Contribution (907,000) (2,520,000) 287,367

Actuarial Loss / (Gain) - (1,011,377) -

- 18,179,623 27,624,298

Transfer to current provisions - (2,396,929) -

Balance at end of year - 15,782,694 27,624,298

- - -

20.1 Ex-Gratia Arrangements

- -

Balance at the beginning of the year - 907,000

Expenditure incurred / Contribution - (907,000)

Present Value of Fund Obligation at the end of the Year - -

Total Recognised Benefit Liability - -



Ex-gratia pensions are pensions that are paid by the Municipality from its revenue i.e. they are not funded or paid from one of the Municipality's pension

arrangements. Provision has therefore not been made in this valuation for the possibility that future employees might be entitled to these annuities.

The interest costs for the year is estimated to be:

The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 30 June 2015 by N Fourie

and J van der Spuy, Fellow members of the Actuarial Society of South Africa. The present value of the defined benefit obligation, and the related current

service cost and past service cost, were measured using the Projected Unit Credit Method.

At year end their were no remaining employees eligible for Ex-gratia arrangement awards.


47

2017 2016

R R

20. NON-CURRENT PROVISIONS (Continued)

2017 2016 2015 2014 2013

R R R R R

Present Value of Defined Benefit

Obligation - - 907,000 835,000 624,207

Deficit - - 907,000 835,000 624,207

20.2 Long Service Awards

2017 2016

R R

Discount Rate 8.13% 8.33%

Cost Inflation Rate 5.94% 6.00%

Net Effective Discount Rate 2.06% 1.24%

Expected Rate of Salary Increase 7.00% 7.00%

Expected Retirement Age - Females 63 63

Expected Retirement Age - Males 63 63

Balance at the beginning of the year 18,179,623 18,233,000

Current service costs 2,138,866 1,968,000

Interest cost 1,415,998 1,510,000

Benefits paid (2,396,929) (2,520,000)

Actuarial loss / (gains) (2,793,748) (1,011,377)

Present Value of Fund Obligation at the end of the Year 16,543,810 18,179,623

Total Recognised Benefit Liability 16,543,810 18,179,623

A long-service award is granted to municipal employees after the completion of fixed periods of continuous service with the Municipality. The provision

represents an estimation of the awards to which employees in the service of the Municipality may become entitled to in future, based on an actuarial

valuation performed.


The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 30 June 2017 by C

Weiss, Fellow member of the Actuarial Society of South Africa. The present value of the defined benefit obligation, and the related current service cost

and past service cost, were measured using the Projected Unit Credit Method.

At year end 1,404 employees were eligible for Long-service Awards.





48

0.00 0.00

2017 2016

R R

20. NON-CURRENT PROVISIONS (Continued)

Present value of fund obligations 16,543,810 18,179,623

Total Benefit Liability 16,543,810 18,179,623

0.00 0.00

Current service cost 2,138,866 1,968,000

Interest cost 1,415,998 1,510,000

Benefits paid (2,396,929) (2,520,000)

Actuarial loss / (gains) (2,793,748) (1,011,377)

(1,635,813) (53,377)

2017 2016 2015 2014 2013

R R R R RPresent Value of Defined Benefit

Obligation 16,543,810 18,179,623 18,233,000 16,904,000 14,323,824

Deficit 16,543,810 18,179,623 18,233,000 16,904,000 14,323,824

2017 2016

R R

The effect of a 1% movement in the assumed rate of long service cost inflation is as follows:

Increase:



Decrease:



20.3 Rehabilitation of Land-fill Sites

26,020,747 27,624,298

Inflation Rate 6.00% 5.00%

Size of landfill site in hectares 16 16

Annual tonnage of waste deposited 72,000 72,000

21. ACCUMULATED SURPLUS

The Accumulated Surplus consists of the following Internal Funds and Reserves:

Capital Replacement Reserve (CRR) 92,131,484 70,058,765

Self-insurance Reserve 24,092,886 23,548,290

C.O.I.D. Reserve 10,720,710 10,610,435

Accumulated Surplus due to the results of Operations 2,207,786,622 1,975,540,087

Total Accumulated Surplus 2,334,731,702 2,079,757,577

The Compensation Commissioner for Occupational Injuries and Diseases (C.O.I.D.) Reserve arises on the exemption from making contributions to the

Compensation Commissioner for Occupational Injuries and Diseases in terms of Section 84 of the COID Act. A fixed deposit as determined by the

Commissioner was made as a security to the Self-Insurance Workman Compensation Reserve.

Refer to Statement of Changes in Net Assets for more detail and the movement on Accumulated Surplus.

The Capital Replacement Reserve (CRR) is a reserve to finance future capital expenditure and is fully cash backed.

Approximately 1ha per year of the landfill site is considered to be filled with no air space remaining and

may be prepared for rehabilitation.



The Self-insurance Reserve covers all internal and external insurance claims against Council. Council is externally insured for catastrophic events.

The amounts recognised in the Statement of Financial Performance are as follows:

The amounts recognised in the Statement of Financial Position are as follows:

An independent valuer performed the valuation. The valuer based his calculations on the rehabilitation

costs incurred on a similar site in the Eastern Cape area.

In terms of the licensing of the landfill refuse sites, the municipality will incur the following licensing and

rehabilitation costs to restore the site at the end of its useful life, estimated to be in 2025 (provision has

been made for the net present value of this cost, using the average cost of borrowing interest rate):


Total Post-retirement Benefit included in Employee Related Costs (Note 29)


49

2017 2016

R R

22. PROPERTY RATES

July 2016 July 2015

R000's R000's

Residential 16,873,818 16,124,603 154,946,745 134,083,243

Business 4,609,862 4,385,479 125,484,655 113,367,185

Residential Business - 312,065 - 5,380,547

Rural 1,979,455 2,400,710 2,355,142 5,392,190

Industrial 483,103 486,833 14,908,298 14,871,730

PSI 74,624 63,255 - -

State 2,988,300 3,109,744 155,135,205 196,476,528

Mining Areas 71,107 75,792 15,666,773 14,825,854

Exempt 2,335,190 2,255,118

Total Assessment Rates 29,415,459 29,213,599 468,496,818 484,397,277

0.00- 0.00-

2017 2016

23. INTEREST EARNED R R

External Investments:

Interest 21,576,378 20,995,888

Outstanding Debtors:

Outstanding Debtors 130,078,100 101,386,838

Total Interest Earned 151,654,478 122,382,726

Financial instruments at amortised cost 151,654,478 122,382,726

24. SERVICE CHARGES

Sale of Electricity 672,725,022 645,803,948

Sale of Water 263,683,923 233,270,363

Refuse Removal 56,421,739 53,975,455

Sewerage and Sanitation Charges 75,408,717 71,844,949

Total Service Charges 1,068,239,402 1,004,894,715

0.00- 0.00-

25. RENTAL OF FACILITIES AND EQUIPMENT

Rental Revenue from Facilities and Equipment 10,024,738 9,839,067

Total Rental of Facilities and Equipment 10,024,738 9,839,067

0.00- 0.00-

26. GOVERNMENT GRANTS AND SUBSIDIES

Unconditional Grants

National Equitable Share 144,171,000 143,335,000

Other Subsidies 8,176,342 7,980,501

Operational Grants 152,347,342 151,315,501

Conditional Grants 101,099,786 124,627,503

National: Financial Management Grant (FMG) 1,625,000 1,600,000

National: Municipal Infrastructure Grant (MIG) 37,079,000 48,329,000

National: Grants 49,005,993 50,574,956

National: Expanded Public Works Programme (EPWP) 5,574,000 4,984,000

Provincial: Grants - 12,121,635

Local Government: Local Municipalities Grant 7,815,794 7,017,911

Total Government Grants and Subsidies 253,447,128 275,943,005

0.00- 0.00-

The amounts disclosed above for revenue from Service Charges are in respect of services rendered

which are billed to the consumers on a monthly basis according to approved tariffs, which are billed to

the consumers on a monthly basis according to approved tariffs.


Interest Earned on Financial Assets, analysed by category of asset, is as follows:

Property Valuations

A rebate of 55% (2016: 50%) was allowed on residential properties for pensioners based on the annual income of the ratepayer's household.

Actual Levies


Valuations on land and buildings are performed every four years in terms of the Municipal property rates act (MPRA). The last general valuation came

into effect on 1 July 2015. Supplementary valuations are processed when necessary to take into account changes in individual property values due to

alterations, subdivisions, etc. Rates are levied on an annual basis with the final date of payment being 30 September each year. Ratepayers can apply

to pay rates monthly. Assessment Rates are levied on the value of land and improvements, which valuation is performed every four years. Interim

valuations are processed on an annual basis to take into account changes in individual property values due to alterations and subdivisions.

Rental revenue earned on Facilities and Equipment is in respect of residential buildings rented out.

50

2017 2016

R R

26. GOVERNMENT GRANTS AND SUBSIDIES (Continued)

Unconditional Grants:

26.1 National Equitable Share: 144,171,000 143,335,000

26.2 Provincial Health Subsidies:

Balance unspent at beginning of year - -

Current year receipts - included in Public Health vote - -

- Primary Health - -

Conditions met - transferred to Revenue - -

Conditions still to be met - transferred to Liabilities (see Note 16) - -

26.3 Other Subsidies


Current year receipts: 8,176,342 7,980,501

- Library 8,006,000 6,609,000

- Miscellaneous 170,342 1,371,501

Conditions met - transferred to Revenue (8,176,342) (7,980,501)


Conditional Grants:

26.4 National: FMG


Current year receipts 1,625,000 1,600,000

Conditions met - transferred to Revenue: Operating Expenses (1,625,000) (1,600,000)


0.00- 0.00-

26.5 National: MIG



Conditions met - transferred to Revenue: Operating Expenses - -

Conditions met - transferred to Revenue: Capital Expenses (37,079,000) (48,329,000)


0.00- 0.00-

26.6 National: Grants

Balance unspent at beginning of year 506,201 31,651,158




Conditions still to be met - transferred to Liabilities (see Note 16) 2,643,881 506,201

0.00- 0.00-

26.7 National - EPWP




Conditions met - transferred to Revenue: Capital Expenses - -


0.00- 0.00-

26.8 Provincial: Grants

Balance unspent at beginning of year 10,505,828 -

Current year receipts - 22,627,463

Conditions met - transferred to Revenue: Operating Expenses - -

Conditions met - transferred to Revenue: Capital Expenses (800,000) (12,121,635)

Conditions still to be met - transferred to Liabilities (see Note 16) 9,705,828 10,505,828

0.00- 0.00-

This grant was used for various projects (included in Appendix F). No funds have been withheld.


The grant is spent in accordance with business plans approved by the Provincial Government

(included in Appendix F). Not all funds have been paid.

This unconditional grant is partly used to subsidise the provision of basic services to registered and

verified indigent community members.

The Municipality renders health services on behalf of the Provincial Government and is refunded the

gazette amount. This grant has been used exclusively for health services (included in Appendix F).


The Financial Management Grant is paid by National Treasury to high capacity municipalities to help

implement the financial reforms required by the Municipal Finance Management Act (MFMA), 2003.

The FMG Grant also pays for the cost of the Financial Management Internship Programme (e.g. salary

costs of the Financial Management Interns). The grant is spent in accordance with National Treasury

guidelines (included in Appendix F). Not all funds have been paid.


The Municipality renders services on behalf of the Provincial Government and is refunded the gazette

amount. This grant has been used exclusively to library expenditure (included in Appendix F). The

conditions of the grant have been met.


51

2017 2016

R R

26. GOVERNMENT GRANTS AND SUBSIDIES (Continued)

26.9 Local Government - Local Municipalities






0.00- 0.00-

26.10 Changes in levels of Government Grants

27. PUBLIC CONTRIBUTIONS AND DONATIONS

Donations Received - 260,514

Total Public Contributions and Donations - 260,514

28. OTHER INCOME

Premiums received and claims recovered 4,521,160 4,406,042

Admission, Academic and transaction fees 6,249,711 5,645,566

Burial fees 2,001,014 1,819,712

Building Plan Approvals 1,665,122 1,722,700

Market Fees 3,241,032 3,541,156

Draining Fees 968,292 996,328

Unclaimed fines, deposits and stale cheques 1,646,736 1,869,036

Other Income 5,665,066 3,986,055

Total Other Income 25,958,133 23,986,595

29. EMPLOYEE RELATED COSTS

Employee Related Costs - Salaries and Wages 321,653,234 328,026,159

Employee Related Costs - Contributions for UIF and Medical Aids 43,935,187 36,718,228

Employee Related Costs - Contributions for Pensions 51,000,500 44,069,507

Travel, Motor Car, Accommodation, Subsistence and Other Allowances 112,116,269 97,706,204

Housing Benefits and Allowances 2,830,109 2,501,884

Overtime Payments 33,685,148 27,574,133

Long-service Awards 11,460,524 9,544,278

Defined Benefit Plan Expense: (10,083,555) 56,825,778

Current Service Cost 12,670,059 9,781,000

Interest Cost 21,439,279 17,614,000

Net Actuarial loss/(gain) recognised (44,192,893) 29,430,778

Total Employee Related Costs 566,597,417 602,966,171

0.00- 0.00-

Remuneration of the Municipal Manager

Annual Remuneration 1,647,100 1,529,204

Car Allowance 150,000 150,000

Company Contributions to UIF, Medical and Pension Funds 322,969 304,789

Total 2,120,069 1,983,993

Remuneration of the Director: Finance

Annual Remuneration 970,919 853,936



Total 1,519,610 1,348,361

Remuneration of the Director: Corporate Services

Annual Remuneration 1,131,555 856,011



Total 1,547,386 1,354,933

Donations received comprise of various assets that was paid for by a third party.

The grant is spent in accordance with business plans approved by the FBD Municipality (included in

Appendix F). No funds have been withheld.

Based on the allocations set out in the Division of Revenue Act, (Act No 2 of 2008), government grant

funding is expected to increase over the forthcoming three financial years.


The amounts disclosed above for Other Income are in respect of services, other than described in

Notes 22 to 26, rendered which are billed to or paid for by the users as the services are required

according to approved tariffs.

52

2017 2016

R R

29. EMPLOYEE RELATED COSTS (Continued)

Remuneration of the Director: Strategy, Economic Development and Planning




Total 1,520,570 1,339,442

Remuneration of the Director: Community Services




Total 1,514,909 1,320,653

Remuneration of the Director: Technical Services

Annual Remuneration - 659,509

Car Allowance - 285,479

Company Contributions to UIF, Medical and Pension Funds - 170,742

Total - 1,115,730

Staff Leave Benefits:-

Municipal Manager 76,714 114,944

Chief Financial Officer 188,112 172,293

Director Community 24,921 110,832

Director Corporate 98,149 145,578

Director SED 127,828 113,063

Total 515,725 656,710

30. REMUNERATION OF COUNCILLORS

Executive Mayor 901,706 818,699

Speaker 721,364 659,301

Councillors 15,596,992 13,434,881

Contributions to UIF, Medical and Pension Funds and other allowances 7,790,947 6,035,206

Total Councillors' Remuneration 25,011,009 20,948,087

0.00- 0.00-

In-kind Benefits

31. DEPRECIATION AND AMORTISATION

Depreciation: Property, Plant and Equipment 53,650,872 55,407,716

Amortisation: Intangible Assets 4,839,694 2,166,453

Depreciation: Investment Property 217,286 217,882

Total Depreciation and Amortisation 58,707,853 57,792,050

0.00- 0.00-

32. IMPAIRMENT LOSS

32.1 Impairment Loss on Financial Assets

Impairment Losses Recognised: 190,194,771 159,613,107

Trade Receivables from exchange transactions 183,174,143 151,506,351

Trade Receivables from non-exchange transactions 7,020,628 8,106,756

Total Impairment Loss 190,194,771 159,613,107

0.00- 0.00-

33. FINANCE COSTS

Loans and Payables at amortised cost 27,789,438 29,018,431

Total Interest Paid on External Borrowings 27,789,438 29,018,431

34. BULK PURCHASES

Electricity 422,425,501 387,543,591

Water 69,540,651 66,466,299

Total Bulk Purchases 491,966,152 454,009,890

0.00- 0.00-

The following compensation was payable to key management personnel in terms of GRAP as at 30

June:



Bulk Purchases are the cost of commodities not generated by the municipality, which the municipality

distributes in the municipal area for resale to the consumers. Electricity is purchased from Eskom

whilst water is purchased from the Department Water Affairs and Forestry.

The post was vacant for the year.

The Councillors occupying the positions of Executive Mayor, Speaker and the Mayoral Committee

serve in a full-time capacity. They are provided with office accommodation and secretarial support at

the expense of the municipality in order to enable them to perform their official duties. Council owned

vehicles are made available for official duties.

53

2017 2016

35. CONTRACTED SERVICES R R

Audit committee 551,596 483,626

Legal and collection cost 6,002,673 4,838,400

Maintenance of Equipment and Security 7,017,734 3,918,452

Project Management 4,034,862 1,969,920

Prepaid Vendor 23,827,253 18,333,313

Other Contracted Services 736,377 1,788,490

Total Grants and Subsidies 42,170,495 31,332,201

36. GRANTS AND SUBSIDIES PAID

Diamonds and Dorings Festival 2,500,000 2,124,035

Gariep Festival 1,500,000 1,300,000

Indigent subsidy 38,949,280 32,695,833

Other Grants 2,484,007 1,501,196

Subsidy paid to Society for Prevention of Cruelty against Animals (SPCA) 1,500,000 1,700,000

Total Grants and Subsidies 46,933,287 39,321,064

0.00- 0.00-

37. GENERAL EXPENSES

Repairs and Maintenance

Hardware in Store 9,314,422 2,768,597

Stores Workshop 140,524 146,730

Building Maintenance 5,747,529 5,263,393

Electricity Maintenance 19,820,653 15,638,914

Fleet Maintenance 15,158,682 13,042,093

General Maintenance 12,073,035 20,834,201

Refuse Maintenance 8,946,113 12,050,894

Roads 18,163,910 35,627,331

Stormwater 1,042,769 -

Safety 207,653 719,027

Sewer 13,373,259 7,814,519

Streetlights 5,902,982 6,200,281

Water 11,856,176 13,577,765

Sub Total Repairs and Maintenance 121,747,706 133,683,745

Other Expenses

Audit fees 3,023,231 3,911,274

Bank charges 3,126,687 2,853,288

Catering municipal activities 1,123,317 207,551

Claims paid 607,243 687,393

Clarification/Purification Chemicals 6,399,861 6,132,095

Cleaning material 1,358,458 1,300,853

Conferences and seminars 7,135,218 8,986,436

Course fees/Skills development levy 5,271,153 5,058,869

Discount on early payment 26,662,598 25,667,386

Electricity 54,423,637 50,327,342

Fuel 10,440,087 10,233,945

Interns and learner ships 1,455,664 2,063,203

Insurance and claims 5,515,108 5,187,271

Membership fees 6,566,311 6,015,855

Postage 2,479,014 2,183,780

Printing and stationary 8,173,279 6,726,040

Refuse removals 692,274 826,621

Sanitation 1,622,028 1,847,107

Software licences and Computer services 3,048,748 4,429,994

Sport/Transport events 1,077,407 1,065,548

Telephone expenditure 4,006,599 4,269,577

Uniforms and Protective clothing 4,134,053 3,831,362

Vehicle licences 1,124,709 1,062,611

Vehicle tracking 839,811 756,195

Water 9,507,295 9,990,733

Water resource management fee 1,952,948 2,061,442

Ward committee activities 1,612,747 3,262,080

Workmen's compensation insurance 1,289,022 1,346,553

Other General Expenses 5,847,901 12,871,024

Sub Total Other Expenses 180,516,408 185,163,427

Total General Expenses 302,264,114 318,847,172

0.00- 0.00-

The comparative figures for General Expenses have been restated to correct errors contained in the prior year Financial Statements. Refer to note 39 on

Correction of Errors for details of the restatement.

The amounts disclosed above for Other General Expenses are in respect of costs incurred in the general management of the municipality and not directly

attributable to a specific service or class of expense.



The grants to the festivals are to promote economic growth. The subsidy to the SPCA is to assist the

municipality to care for stray animals and other related tasks. The subsidy is paid on an annual basis.

54

2016

R

38. CHANGE IN ACCOUNTING POLICY

39. CORRECTION OF ERROR

Details of the appropriations are as follows:

Unappropriated Surplus Account:

Corrections to Creditors (215,548)

Corrections to Expenditure (44,852,304)

Increase / (Decrease) in Unappropriated Surplus Account (45,067,852)

Increase / (Decrease) in Accumulated Surplus Account (45,067,852)

0.00-

39.1 Restatement of Revenue:

The effect of the Correction of Error is as follows: 2016 2016 Restated

Revenue Correction Amount

Other Income 23,659,662 326,932 23,986,595

23,659,662 326,932 23,986,595

39.2 Restatement of Expenditure:


Expenditure Correction Amount

Employee Related Costs 600,873,547 2,092,624 602,966,171

Depreciation and Amortisation 57,792,050 - 57,792,050

Contracted Services 30,876,978 455,223 31,332,201

General Expenses 175,681,639 143,165,534 318,847,172

Impairment Losses -

Repairs and Maintenance 120,274,041 (120,274,041) -

985,498,254 25,439,340 1,010,937,594

39.3 Restatement of Statement of Financial Position:


Fin Position Correction Amount

Accumulated Surplus 2,149,178,236 (69,420,659) 2,079,757,577

Payables from Exchange Transactions 159,291,016 1,981,239 161,272,255

Property, Plant and Equipment 1,491,144,032 (67,700,409) 1,423,443,623

39.4 Restatement of Non-current Liabilities:

Corrections were made and appropriated to the Accumulated Surplus Account during the financial year

ended 30 June.

The prior year figures of Revenue Classes have been restated to correctly classify the nature of

Revenue of the municipality. Refer to note 39.8 for further details regarding the nature of these errors

and how it was rectified.

No restatements for the financial year.


There were no changes in accounting policy during the current financial year under review.

The prior year figures of Expenditure Classes have been restated to correctly classify the nature of

Expenditure of the municipality. Refer to note 39.6 and 39.9 for further details regarding the nature of

these errors and how it was rectified.

The prior year balances of items on the Statement of Financial Position have been restated to correctly

classify the nature of the balances.


55

39. CORRECTION OF ERROR (Continued)

39.5 Restatement of Current Liabilities:

The effect of the Correction of Error is as follows:

Balances as per AFS previously published for 2015/2016 159,291,016

Restatement of Current Liabilities 1,981,239

Balances as per current AFS published for 2015/2016 161,272,255

39.6 Restatement of Non-Current Assets


Balances as per AFS previously published for 2015/2016 6,299,418 1,491,144,032

Restatement of non-current assets - (67,700,409)

Balances as per current AFS published for 2015/2016 6,299,418 1,423,443,623

39.7 Restatement of Depreciation:

39.8 Adjustment of Revenue:


Balances as per AFS previously published for 2015/2016 23,659,662

Adjustment of prior period revenue 326,932

Balances as per current AFS published for 2015/2016 23,986,595

39.9 Adjustment of Expenses:

Balances as per AFS previously published for 2015/2016 600,873,547 57,792,050 175,681,639

Adjustment of prior period expenses 2,092,624 - 143,165,534

Balances as per current AFS published for 2015/2016 602,966,171 57,792,050 318,847,172

39.10 Restatement of Current Assets


Balances as per AFS previously published for 2015/2016 1,166,357,395

Adjustment for prior period error 304,378

Balances as per current AFS published for 2015/2016 1,166,661,773

Other Income

No restatement was needed for Depreciaton.

Intangible Assets

Included in the prior year's restated balance for Current Assets are restated balances for Trade

Receivables from Non Exchange Transactions. The effect on Accumulated Surplus and on Current

Assets is reflected below.

Current Assets

Employee

Related Costs

General Expenses

Payables from

Exchange

Transactions


The prior year figure for Work in progress on Assets were unbundled identifying expenditure that was

moved to General Expenditure and the Surplus Account (this restatement was due to a corrections

made to the Asset Register). This oversight has been rectified and the restated figure is reflected

below.

Property, Plant and

Equipment

Included in the prior year's restated payables from exchange balance is an amount of R2 092 624 in

respect of a salary contracted workers correction retrospectively.

The prior year figure for Work in progress on Assets were unbundled identifying expenditure that was

moved to General Expenditure and the Surplus Account (this restatement was due to a corrections

made to the Asset Register). This oversight has been rectified and the restated figure is reflected

below.

Depreciation and

Amortisation


Included in the restated prior year figures for Other Income (refer to Note 28) is various unknown

deposits which has now been classified as revenue.


56

2017 2016

40. CHANGE IN ACCOUNTING ESTIMATES R R

41. CASH GENERATED BY OPERATIONS

Surplus / (Deficit) for the Year 254,974,125 235,873,458

Adjustment for:

Adjusting non cash flow items prior errors 4,212,532 (215,548)

Depreciation and Amortisation 58,707,853 57,792,050

Contribution to Impairment Provision 192,872,291 161,570,809

Bad Debts Written-off (34,409,273) (21,154,765)

Investment Income (151,654,478) (122,382,726)

Finance Costs 27,789,438 29,018,431

Operating surplus before working capital changes 352,492,487 340,501,709

(Increase)/Decrease in Inventories 720,418 231,245

(Increase)/Decrease in Trade Receivables from Exchange Transactions (267,188,945) (210,432,580)

(Increase)/Decrease in Trade Receivables from Non-Exchange Transactions (102,975,494) (118,494,524)

(Increase)/Decrease in VAT Receivable 2,031,545 (4,365,393)

(Increase)/Decrease in Operating Lease Assets 34,999 37,186

Increase/(Decrease) in Consumer Deposits 1,148,935 6,971,835

Increase/(Decrease) in Creditors (4,499,926) 5,027,534

Increase/(Decrease) in Conditional Grants and Receipts 1,337,680 (20,639,129)

(increase)/Decrease in provisions (20,382,607) 49,665,145

Increase/(Decrease) in VAT Payable 7,984,395 4,426,023

Cash generated by / (utilised in) Operations (29,296,512) 52,929,052

Income for the year 2,010,170,639 1,950,233,339

Adjustment for:-

Investment income (151,654,478) (122,382,726)

(Increase)/Decrease in Trade Receivables from Exchange Transactions (267,188,945) (210,432,580)

Bad Debts Written-off (34,409,273) (21,154,765)

(Increase)/Decrease in Operating Lease Assets 34,999 37,186

Increase/(Decrease) in Consumer Deposits 1,148,935 6,971,835

(Increase)/Decrease in Trade Receivables from Non-Exchange Transactions (102,975,494) (118,494,524)

(Decrease)/increase in conditional grants and receipts 1,337,680 (20,639,129)

Cash receipts from ratepayers, government and other 1,456,464,064 1,464,138,637

Grants received 253,447,128 275,943,005

Sale of goods and services 1,203,016,936 1,188,195,632

Expenditure for the year 1,755,196,515 1,714,359,881

Adjustment for:-

Depreciation 58,707,853 57,792,050

Contribution to bad debt provision 192,872,291 161,570,809

Adjusting non cash flow items prior errors 4,212,532 (215,548)

Interest paid 27,789,438 29,018,431

Operating expenditure before working capital changes: 1,471,614,401 1,466,194,139

(Increase)/Decrease in inventories 720,418 231,245

(Decrease)/Increase in creditors (4,499,926) 5,027,534

(increase)/Decrease in provisions (20,382,607) 49,665,145

(decrease)/Increase in VAT 10,015,940 60,630

Cash paid to suppliers and employees 1,485,760,576 1,411,209,585

Employee Costs 566,597,417 602,966,171

Suppliers paid 919,163,159 808,243,414

Cash generated by/(utilized in) operations (29,296,512) 52,929,052

0.00 0.00

42. NON-CASH INVESTING AND FINANCING TRANSACTIONS

43. FINANCING FACILITIES

- Amount used - -

- Amount unused - -

No changes were made to existing accounting estimates during the current financial year that could

potentially have a material impact on the Annual Financial Statements.


The municipality did not enter into any Non-cash Investing and Financing Transactions during the

financial year under review.

Unsecured Bank Overdraft Facility payable at call:

57

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2017 2016

R R

44. LONG-TERM LIABILITIES

Long-term Liabilities (See Note 18) 218,672,802 226,876,321

45. UNAUTHORISED, IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE DISALLOWED

45.1 Unauthorised Expenditure

2017 2016 2015

R R R

Reconciliation of Unauthorised Expenditure:

Opening balance - - -

Unauthorised Expenditure current year - 10,329,679 2,823,634

Approved by Council - (10,329,679) (2,823,634)

Unauthorised Expenditure awaiting authorisation - - -

45.2 Fruitless and Wasteful Expenditure

2017 2016

R R

Reconciliation of Fruitless and Wasteful expenditure:

Opening balance 1,542,706 119,692

Fruitless and Wasteful Expenditure current year 70,141 1,574,360

Written off by Council (220,141) (151,345)

Fruitless and Wasteful Expenditure awaiting condonement 1,392,707 1,542,706

Incident

SARS penalty fees 1,392,707

45.3 Irregular Expenditure

2017 2016 2015

R R R

Reconciliation of Irregular Expenditure:

Opening balance 13,448,957 212,719,245 10,097,201

Irregular Expenditure current year 1,932,199 40,404,352 210,916,140

Irregular Expenditure correction - 27,114,548 1,773,413

Written off by Council or ratified by Accounting Officer (15,381,156) (266,789,188) (10,067,510)

Irregular Expenditure awaiting condonement - 13,448,957 212,719,245

46. 2017 2016

R R

46.1 Contributions to organised local government - SALGA

Opening Balance - -

Council Subscriptions 6,496,561 6,000,431

Amount Paid - current year (6,496,561) (6,000,431)

Balance Unpaid (included in Creditors) - -

Amount


ADDITIONAL DISCLOSURES IN TERMS OF MUNICIPAL FINANCE

To management's best of knowledge the following Unauthorised Expenditure was incurred during the

year under review.

Causes

Interest and penalties paid to SARS.

Long-term Liabilities have been utilised in accordance with section 46 of the Municipal Finance

Management Act. See detail information in Appendix A.

58

2017 2016

R R

46.

46.2 Audit Fees

Opening Balance - -

Current year Audit Fee 3,023,231 3,911,274



46.3 VAT

46.4 PAYE and UIF

Opening Balance - -

Current year Payroll Deductions 88,421,392 75,638,755



46.5 Pension and Medical Aid Deductions

Opening Balance - -

Current year Payroll Deductions and Council Contributions 140,121,681 128,821,276



46.6 Councillor's arrear Consumer Accounts

Outstanding Outstanding

30 June 2017 Total up to more than

90 days 90 days

Kika SN 120,506 7,138 113,368

Thabane MP 22,053 3,892 18,161

Doyle MS 115,653 4,704 110,949

Francis BP 27,533 2,662 24,871

Meintjies M 1,500 - 1,500

Niemann E 23,801 4,907 18,894

Total Councillor Arrear Consumer Accounts 311,768 24,025 287,744

The following Councillors had arrear accounts outstanding for more than 90 days as at:


VAT inputs receivables and VAT outputs receivables are shown in Note 8 and 17. All VAT returns

have been submitted by the due date throughout the year.



MANAGEMENT ACT (Continued)

59

46.

Outstanding Outstanding

30 June 2016 Total up to more than

90 days 90 days

Askin LA 467 - 467

Bishop MJ 35 - 35

Boqo SG 148 - 148

Doman WP/SE 2,110 1,578 532

Hale GP 1,900 1,543 357

Jabetla AK 22 - 22

Likua A & Frans T 216 209 8

Ludick HP 261 - 261

Matsio FF 39 19 20

Matsio J 103 - 103

Modise OD & E 17 - 17

Morudi GD 538 400 138

Mpampi EZ 1,303 1,026 276

Ntlhangula A 1,169 - 1,169

O'Neill-Coutts PA 12,483 7,935 4,547

Pitt RA 30,051 1,606 28,445

Louw PJF 453 340 113

Rosen MS 302 - 302

Strauss PAS 3,723 2,252 1,471

Thabane MP 2,426 1,820 606

Tsimakwane SK 99 - 99

Van der Merwe GS 731 - 731

Vilakazi PM 3,702 861 2,840

Visagie GE 64 - 64

Visser MB 811 663 148

Wyngaard H (Settley) 1,286 710 576

Total Councillor Arrear Consumer Accounts 65,402 21,905 43,497

46.7 Non-Compliance with Chapter 11 of the Municipal Finance Management Act

46.8 Deviation from, and ratification of minor breaches of, the Procurement Processes

2017 2016

46.9 Material losses R R

35,162,509 37,478,402

103,673,290 74,809,523

47. COMMITMENTS FOR EXPENDITURE

47.1 Capital Commitments

Commitments in respect of Capital Expenditure:

- Approved and Contracted for:- 68,248,876 45,788,773

Infrastructure 68,248,876 45,788,773

In terms of section 125(d)(i) of the Municipal Finance Management Act disclosure regarding electricity

losses as a result of various factors are 24.54%, 123 614 485 kWh (2016: 19.13% 96 336 526

kWh) is disclosed to the amount of:



No known matters existed at the reporting date.


MANAGEMENT ACT (Continued)

In terms of section 125(d)(i) of the Municipal Finance Management Act disclosure regarding water

losses as a result of various factors for example burst pipes and stand pipes not metered is 50.56%, 15

898 386 kl (2016: 56.39%, 18 752 511 kl) is disclosed to the amount of:

In terms of section 36(2) of the Municipal Supply Chain Management Regulations any deviation from

the Supply Chain Management Policy needs to be approved / condoned by the Municipal Manager and

noted by Council. The Municipality has deviated from the procurement policy, the details of which were

reported to council (refer to appendix G).

60

2017 2016

48. FINANCIAL INSTRUMENTS R R

48.1 Classification

FINANCIAL ASSETS:

Trade receivables from exchange transactions

Electricity Amortised cost 56,354,079 43,801,891

Refuse Amortised cost 25,884,982 19,931,162

Sewerage Amortised cost 32,764,877 24,907,825

Water Amortised cost 120,883,263 89,846,924

Miscellaneous Amortised cost 201,626,472 145,594,705

Market Amortised cost 306,002 304,544

Housing Debtors Amortised cost 11,875,240 9,561,306

Trade receivables from non exchange transactions

Assessment Rates Amortised cost 558,161,692 472,653,553

Government Subsidy Claims Amortised cost 58,595,814 47,423,409

Miscellaneous debtors Amortised cost 5,862,505 7,143,930

Traffic Fines Amortised cost 5,732,965 4,836,816

Bank, Cash and Cash Equivalents

Bank Amortised cost 24,629,446 34,343,040

Call Deposits Amortised cost 87,950,000 90,950,000

Notice Deposits Amortised cost 113,965,838 133,965,838

Cash Floats and Advances Amortised cost 16,120 16,820

Operating Lease Assets

Operating Lease Assets / Receivables Amortised cost - 34,999

1,304,609,294 1,125,316,763

SUMMARY OF FINANCIAL ASSETS

Amortised cost

Short-term Investment Deposits Notice Deposits 113,965,838 133,965,838

Trade receivables from non-exchange transactions Assessment Rates 558,161,692 472,653,553

Trade receivables from exchange transactions Electricity 56,354,079 43,801,891

Trade receivables from exchange transactions Refuse 25,884,982 19,931,162

Trade receivables from exchange transactions Sewerage 32,764,877 24,907,825

Trade receivables from exchange transactions Water 120,883,263 89,846,924

Trade receivables from exchange transactions Miscellaneous 201,626,472 145,594,705

Trade receivables from exchange transactions Market 306,002 304,544

Trade receivables from exchange transactions Housing Debtors 11,875,240 9,561,306

Trade receivables from non-exchange transactions Government Subsidy Claims 58,595,814 47,423,409

Trade receivables from non-exchange transactions Miscellaneous debtors 5,862,505 7,143,930

Trade receivables from non-exchange transactions Traffic Fines 5,732,965 4,836,816

Operating Lease Assets Operating Lease Assets / Receivables - 34,999

Bank Balances and Cash Cash Floats and Advances 24,645,566 34,359,860

Short-term Investment Deposits Call Deposits 87,950,000 90,950,000

Total Financial Assets 1,304,609,294 1,125,316,763

FINANCIAL LIABILITIES:

Long-term Liabilities

Annuity Loans Amortised cost 210,434,634 218,675,316

Consumer Deposits

Electricity and Water Amortised cost 29,969,181 28,820,246

Creditors

Trade Creditors Amortised cost 95,338,281 102,525,669

Other Creditors Amortised cost 1,256,734 -

Payments received in Advance Amortised cost 16,414,735 16,392,940

Staff Bonuses Amortised cost 10,270,236 9,911,283

Accrued leave Amortised cost 33,492,342 32,442,363

Unspent Conditional Grants and Receipts

Conditional Grants from Government Amortised cost 12,349,709 11,012,029

Current Portion of Long-term Liabilities


417,764,021 427,980,852

SUMMARY OF FINANCIAL LIABILITIES

Financial Liabilities at Amortised Cost:

Long-term Liabilities Annuity Loans 210,434,634 218,675,316

Consumer Deposits Electricity and Water 29,969,181 28,820,246

Payables from exchange transactions Trade Creditors 95,338,281 102,525,669

Payables from exchange transactions Other Creditors 1,256,734 -

Unspent Conditional Grants and Receipts Conditional Grants from Government 12,349,709 11,012,029

Current Portion of Long-term Liabilities Annuity Loans 8,238,168 8,201,006

Payables from exchange transactions Payments received in Advance 16,414,735 16,392,940

Payables from exchange transactions Staff Bonuses 10,270,236 9,911,283

Payables from exchange transactions Accrued leave 33,492,342 32,442,363

Total Financial Liabilities 417,764,021 427,980,852


In accordance with GRAP 104.13 the Financial Assets of the municipality are classified as follows:


Financial Assets

In accordance with GRAP 104.13 the Financial Liabilities of the municipality are classified as follows:

Financial Liabilities Classification

Classification

61

48. FINANCIAL INSTRUMENTS (Continued)

48.2 Capital Risk Management

2017 2016

Gearing Ratio R R

Net Debt 417,764,021 427,980,852

Equity 2,334,731,702 2,079,757,577

Net debt to equity ratio 17.89% 20.58%

48.3 Financial Risk Management Objectives

48.4 Significant Accounting Policies

48.5 Liquidity Risk

48.6 Market Risk

48.6.1 Foreign Currency Risk Management

48.6.2 Interest Rate Risk Management

Debt is defined as Long term Liabilities, as detailed in the notes.

Internal audit, responsible for initiating a control framework and monitoring and responding to potential risk, reports periodically

to the municipality’s audit committee, an independent body that monitors the effectiveness of the internal audit function. Further quantitative disclosures

are included throughout these financial statements.

Liquidity risk is the risk that the Municipality will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by

delivering cash or another financial asset. The Municipality’s approach to managing liquidity is to ensure, as far as possible, that it will always have

sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to

the Municipality’s reputation.

Liquidity risk is managed by ensuring that all assets are reinvested at maturity at competitive interest rates in relation to cash flow requirements.

Liabilities are managed by ensuring that all contractual payments are met on a timeous basis and, if required, additional new arrangements are

established at competitive rates to ensure that cash flow requirements are met.

The municipality manages its capital to ensure that the municipality will be able to continue as a going concern while delivering sustainable services to

consumers through the optimisation of the debt and equity balance. The capital structure of the municipality consists of debt, which includes the Long-

term Liabilities disclosed in Note 18, Bank, Cash and Cash Equivalents and Equity, comprising Funds, Reserves and Accumulated Surplus as disclosed

in Note 6 and the Statement of Changes in Net Assets.

Equity includes all Funds and Reserves of the municipality, disclosed as Net Assets in the Statement of Financial Position.

In the case of debtors whose accounts become in arrears, it is endeavoured to collect such accounts by "levying of penalty charges", "demand for

payment", "restriction of services" and, as a last resort, "handed over for collection", whichever procedure is applicable in terms of Council's Credit

Control and Debt Collection Policy.

The municipality limits its counterparty exposures from its money market investment operations by only dealing with well-established financial institutions

of high credit standing. The credit exposure to any single counterparty is managed by setting transaction / exposure limits, which are included in the

municipality's Investment Policy.

Consumer debtors comprise of a large number of ratepayers, dispersed across different industries and geographical areas. Consumer debtors are

presented net of a provision for impairment.

The Directorate: Financial Services monitors and manages the financial risks relating to the operations through internal policies and procedures. These

risks include interest rate risk, credit risk and liquidity risk. Compliance with policies and procedures is reviewed by the internal auditors on a continuous

basis, and annually by external auditors. The municipality does not enter into or trade financial instruments for speculative purposes. Internal audit,

responsible for initiating a control framework and monitoring and responding to potential risk, reports periodically to the municipality’s audit committee, an

independent body that monitors the effectiveness of the internal audit function.

The gearing ratio at the year-end was as follows:


The municipality’s activities expose it primarily to the financial risks of changes in interest rates (see Note 48.6 below). No formal policy exists to hedge

volatilities in the interest rate market. There has been no change to the municipality’s exposure to market risks or the manner in which it manages and

measures the risk.

Details of the significant Accounting Policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on

which income and expenses are recognised, in respect of each class of Financial Asset and Financial Liability are disclosed in the Accounting Policies to

the Annual Financial Statements.

Interest Rate Risk is defined as the risk that the fair value or future cash flows associated with a financial instrument will fluctuate in amount as a result of

market interest changes. Potential concentrations of interest rate risk consist mainly of variable rate deposit investments, trade receivables, cash and

cash equivalents, and loan payables.

The municipality has very limited exposure to the financial risks of foreign currency.

The Accounting Officer has overall responsibility for the establishment and oversight of the Municipality's risk management framework. The Municipality's

risk management policies are established to identify and analyse the risks faced by the Municipality, to set appropriate risk limits and controls and to

monitor risks and adherence to limits.

Due to the largely non-trading nature of activities and the way in which they are financed, municipalities are not exposed to the degree of financial risk

faced by business entities. Financial Instruments play a much more limited role in creating or changing risks that would be typical of listed companies to

which the IAS's mainly apply. Generally, Financial Assets and Liabilities are generated by day-to-day operational activities and are not held to manage

the risks facing the municipality in undertaking its activities.

62

2017 2016

R R


Interest Rate Sensitivity Analysis

SENSITIVITY ANALYSIS - INTEREST RATE

Effect of a change in interest rate on interest bearing financial assets and liabilities

Financial Assets Classification

External investments:

Call Deposits Amortised cost 87,950,000 90,950,000

Notice Deposits Amortised cost 113,965,838 133,965,838

201,915,838 224,915,838

Interest received

Interest Earned - External Investments 21,576,378 20,995,888

Interest rate 11% 9%

Effect of a change in interest rate on interest earned from external investments:

Effect of change in interest rate % 10% 8%

Effect of change in interest rate Rand value 19,557,219 18,746,730



Outstanding debtors:

Trade receivables from exchange transactions Amortised cost 449,694,913 333,948,358

Trade receivables from non-exchange transactions Amortised cost 622,620,012 527,255,891

1,072,314,925 861,204,249

Interest received

Interest Earned - Outstanding Debtors 130,078,100 101,386,838

Interest rate 12% 12%

Effect of a change in interest rate on interest earned from outstanding debtors





Financial Liabilities Classification

Long-term Liabilities


Annuity Loans - current portion Amortised cost 8,238,168 8,201,006

218,672,802 226,876,321

Interest paid

Long-term Liabilities 27,789,438 29,018,431

Interest rate % 13% 13%

Effect of a change in interest rate on interest paid on long-term liabilities






The sensitivity analysis below was determined based on the exposure to interest rates at the reporting date. For variable rate long-term instruments, the

analysis is prepared assuming the amount of the instrument outstanding at the reporting date was outstanding for the whole year. A 100 basis point

increase or decrease was used, which represents management’s assessment of the reasonably possible change in interest rates.


63


48.7 Effective Interest Rates and Repricing Analysis

30 June 2017

Average 6 Months 6 - 12 1 - 2 2 - 5 More than

Description effective Total

Interest Rate or less Months Years Years 5 Years

% R R R R R R

FIXED RATE INSTRUMENTS

Bank Facilities 218,672,802 - - - 4,218,018 214,454,784

Loan No 101452 : DBSA 10.91% 4,218,018 4,218,018

Loan No 102855/1 : DBSA 12.61% 14,985,546 14,985,546

Loan No 102855/3 : DBSA 6.75% 2,664,886 2,664,886

Loan No 103958/2 : DBSA 12.445% 196,804,352 196,804,352

Total Fixed Rate Instruments 218,672,802 - - - 4,218,018 214,454,784

VARIABLE RATE INSTRUMENTS

Short-term Investment Deposits 201,915,838 87,950,000 113,965,838

Bank Balances and Cash 16,120 16,120

Housing guarantees 13,994 13,994

Total Variable Rate Instruments 201,945,952 87,966,120 113,965,838 - - 13,994

30 June 2016




% R R R R R R

FIXED RATE INSTRUMENTS

Bank Facilities 226,876,321 - 864,007 - 5,615,367 220,396,947

Loan No 10616 : DBSA 12.00% 864,007 864,007

Loan No 101452 : DBSA 10.91% 5,615,367 5,615,367

Loan No 102855/1 : DBSA 12.61% 15,545,480 15,545,480

Loan No 102855/3 : DBSA 6.75% 2,982,086 2,982,086

Loan No 103958/2 : DBSA 12.445% 201,869,382 201,869,382

Total Fixed Rate Instruments 226,876,321 - 864,007 - 5,615,367 220,396,947

VARIABLE RATE INSTRUMENTS

Short-term Investment Deposits 224,915,838 90,950,000 133,965,838

Bank Balances and Cash 16,820 16,820

Housing guarantees 13,994 13,994

Total Variable Rate Instruments 224,946,652 90,966,820 133,965,838 - - 13,994



In accordance with GRAP 104.116 the following tables indicate the average effective interest rates of Income-earning Financial Assets and Interest-bearing Financial Liabilities at the reporting date and the

periods in which they mature or, if earlier, reprice:

64

48.8 Other Price Risks

48.9 Liquidity Risk Management

Liquidity and Interest Risk Tables

30 June 2017




% R R R R R R

Non-interest Bearing

- Consumer Deposits 29,969,181 29,969,181

- Creditors 156,772,329 156,772,329

- Unspent Conditional Grants 12,349,709 12,349,709

Fixed Interest Rate Instruments

Loan No 101452 : DBSA 10.91% 4,935,254 987,050 987,050 1,974,100 987,054

Loan No 102855/1 : DBSA 12.61% 28,806,253 1,252,446 1,252,446 2,504,892 7,514,675 16,281,795

Loan No 102855/3 : DBSA 6.75% 4,107,399 256,712 256,712 513,425 1,540,275 1,540,275

Loan No 103958/2 : DBSA 12.45% 420,408,996 15,014,607 15,014,607 30,029,214 90,087,642 270,262,926

Total 657,349,120 174,283,144 29,860,524 35,021,630 100,129,645 318,054,177

30 June 2016




% R R R R R R

Non-interest Bearing

- Consumer Deposits 28,820,246 28,820,246

- Creditors 161,272,255 161,272,255

- Unspent Conditional Grants 11,012,029 11,012,029

Fixed Interest Rate Instruments

Loan No 10616 : DBSA 12.00% 943,148 471,574 471,574

Loan No 101452 : DBSA 10.91% 6,909,352 987,050 987,050 1,974,100 2,961,152

Loan No 102855/1 : DBSA 12.61% 31,311,144 1,252,446 1,252,446 2,504,892 7,514,675 18,786,687

Loan No 102855/3 : DBSA 6.75% 5,134,249 256,712 256,712 513,425 1,540,275 2,567,125

Loan No 103958/2 : DBSA 12.45% 450,438,210 15,014,607 15,014,607 30,029,214 90,087,642 300,292,140

Total 695,840,633 179,254,644 28,994,418 35,021,630 102,103,743 350,466,198

Ultimate responsibility for liquidity risk management rests with the Council. The municipality manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by

continuously monitoring forecast and actual cash flows. Included in the note is a listing of additional undrawn facilities that the municipality has at its disposal to further reduce liquidity risk (cash).

The municipality ensures that it has sufficient cash on demand or access to facilities to meet expected operational expenses through the use of cash flow forecasts. The following tables detail the

municipality’s remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date

on which the municipality can be required to pay. The table includes both interest and principal cash flows.

The municipality is not exposed to equity price risks arising from equity investments as the municipality does not trade these investments.


65


48.10 Credit Risk Management

30 June 2017 30 June 2016

Gross Gross

Amount Amount

R R

Department of Public Works 465,849,624 266,537,997

Kimberley Cold Storage PTY 23,336,042 10,652,495

GW Rugby Union 9,057,656 7,887,099

Wide Dimension Trading 7 BK 7,226,601 -

Department of Roads - 9,431,809

De Beers Consolidated Mines 48,232,695 32,253,914

2017 2016

R R

Fixed Deposit Investments 201,915,838 224,915,838

Finance Lease Receivables 2,543,280 1,758,396

Consumer Debtors 449,694,913 333,948,358

Other Debtors 628,352,977 532,057,708

Bank, Cash and Cash Equivalents 16,120 16,820

Operating Lease Assets - 34,999

Housing Guarantees 13,994 13,994

Maximum Credit and Interest Risk Exposure 1,282,537,123 1,092,746,113



Credit Risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the municipality.

Potential concentrations of credit rate risk consist mainly of variable rate deposit investments, long-term receivables, consumer debtors,

other debtors, bank and cash balances.

The Municipality establishes an allowance for impairment that represents its estimate of anticipated losses in respect of trade and other

receivables.

The municipality limits its counterparty exposures from its investment operations (financial assets that are neither past due nor impaired)

by only dealing with well-established financial institutions of high credit standing. The credit exposure to any single counterparty is

managed by setting transaction / exposure limits, which are included in the municipality's Investment Policy.

Trade Receivables consist of a large number of customers, spread across diverse industries in the geographical area of the municipality.

Periodic credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee is

increased accordingly.

Except as detailed in the following table, the carrying amount of financial assets recorded in the Annual Financial Statements, which is net

of impairment losses, represents the municipality’s maximum exposure to credit risk without taking account of the value of any collateral

obtained:

The municipality does not have any significant credit risk exposure to any single counterparty or any group of counter parties having

similar characteristics. The municipality defines counterparties as having similar characteristics if they are related entities. The credit risk

on liquid funds is limited because the counterparties are banks with high credit-ratings.

The table below shows the balance of the 5 major counterparties at the balance sheet date. Management is of the opinion that, although

these parties are the 5 counterparties with highest outstanding balances, no significant credit risk exposure exists.

Counterparty and Location

Consumer Debtors comprise of a large number of ratepayers, dispersed across different industries and geographical areas within the

jurisdiction of the municipality. On going credit evaluations are performed on the financial condition of these debtors. Consumer debtors

are presented net of a provision for impairment. In the case of debtors whose accounts become in arrears, it is endeavoured to collect

such accounts by "levying of penalty charges", "demand for payment", "restriction of services" and, as a last resort, "handed over for

collection", whichever procedure is applicable in terms of Council's Credit Control and Debt Collection Policy.

The maximum credit and interest risk exposure in respect of the relevant financial instruments is

as follows:

66


2017 2016

R R

Households 554,965,368 456,327,954

Industrial/commercial 143,188,634 106,659,055

National and provincial government 294,575,218 235,508,146

Maximum Consumer Risk Exposure 992,729,221 798,495,154

49. MULTI-EMPLOYER RETIREMENT BENEFIT INFORMATION

51,000,500 44,069,507

Municipal Councillors Pension Fund:

LA Retirement Fund/Cape Joint Pension Fund:

Cape Retirement Fund:

SALA Pension Fund:

At the valuation date of 1 July 2015 the SALA pension fund was 100% (1 July 2014: 100%) funded. The valuator indicated that the

decrease in the solvency reserve was a change to the methods used to calculate the liabilities. The Fund therefore remained financially

sound since the previous valuation.

(ii) One set of financial statements are compiled for each fund and financial statements are not drafted for each participating employer.

(i) The assets of each fund are held in one portfolio and are not notionally allocated to each of the participating employers.

These schemes are subject to either a tri-annual, bi-annual or annual actuarial valuation, details which are provided below.

All participating councillors belong to the Pension Fund for Municipal Councillors.


Employees belong to a variety of approved Pension and Provident Funds as described below.

The major concentrations of credit risk that arise from the Municipality's receivables in relation to customer classification are as follows:

The maximum credit and interest risk exposure in respect of the relevant customer classification

is as follows:


The actuarial valuator of the Pension Fund for councillors stated that the Fund has a funding level of 99.5% as at 30 June 2012 and is

therefor technically not financially sound. They regard the deficit of R6.4m as relatively insignificant in the context of the Fund and there a

possible reverse of SARS penalties of R10.3m that will result in the Fund being fully funded.

The Cape Retirement Fund operates as a defined contribution scheme. The last actuarial valuation performed for the year ended 30 June

2016 revealed that the fund has a funding level of 100%(30 June 2015: 100%) for the Preservation Pensions account and 118%(30 June

2015: 112.1%) for the Pension Account. The contribution rate paid by the members (9%) and Municipalities (18%) is sufficient to fund the

benefits accruing from the fund in the future.

The statutory valuation performed as at 30 June 2016 revealed a funding level of 103.5% for the Pensioner Account, the Defined

Contribution Section was 100% and the Defined Benefits Section 106.1% funded.

The valuator stated that Cape Retirement Fund is in a sound financial condition as at 30 June 2015.

The Municipal Councillors Fund and the Cape Retirement Fund are defined contribution plans, whereas the other funds are defined benefit

plans. All of these afore-mentioned funds are multi-employer plans. Sufficient information is not available to use defined benefit

accounting for the pension and retirement funds, due to the following reasons:-

(iii) The same rate of contribution applies to all participating employers and no regard is paid to differences in the membership

distribution of the participating employers.

It is therefore seen that each fund operates as a single entity and is not divided into sub-funds for each participating employer.

The only obligation of the municipality with respect to the retirement benefit plans is to make the specified contributions. Where councillors

/ employees leave the plans prior to full vesting of the contributions, the contributions payable by the municipality are reduced by the

amount of forfeited contributions.

The Retirement Funds have been valued by making use of the Discounted Cash Flow method of valuation.

The total expense recognised in the Statement of Financial Performance represents

contributions payable to these plans by the municipality at rates specified in the rules of the

plans. These following contributions have been expensed:

None of the below mentioned Funds are State Plans.

67

49. MULTI-EMPLOYER RETIREMENT BENEFIT INFORMATION (Continued)

Municipal Employees Pension Fund:

National Fund for Municipal Workers:

South African Municipal Workers Union National Provident Fund:

50. RELATED PARTY TRANSACTIONS

50.1 Interest of Related Parties

50.2 Services rendered to Related Parties

50.3 Loans granted to Related Parties

50.4 Compensation of Related Parties

At the valuation date of 28 February 2011 the Municipal Employees Pension Fund was 107.9% (29 February 2009: 102.2%) funded. The

valuator stated that the fund was in a sound position as at 29 February 2011, having sufficient assets to cover its obligations.

The services rendered to Related Parties are charged at approved tariffs that were advertised to the public. No Bad Debts were written off

or recognised in respect of amounts owed by Related Parties.

The SAMWUN Provident Fund operates as a defined contribution fund. At the last valuation date of 30 June 2014 the Fund was 111.7%

funded. The valuator recommended that to retain a sound financial position, the members and employer continue to contribute at the

current rate.

At the valuation date of 30 June 2015 the National Fund for Municipal Workers the Valuator stated that the assets of the fund available for

benefits are sufficient to cover 100.42% of the members' liabilities and the fund was hence financially sound.

Compensation of Key Management Personnel and Councillors is set out in Notes 29 and 30 respectively, to the Annual Financial

Statements.

In terms of the MFMA, the municipality may not grant loans to its Councillors, Management, Staff and Public with effect from 1 July 2004.

Councillors and/or management of the municipality have relationships with businesses.


68

50. RELATED PARTY TRANSACTIONS (Continued)

2017 2016

R R

50.5 Purchases from Related Parties

Name Related

Supplier Person

MCD Painters K Mcdonalds

Qongo TG Trading Mother

Naledi Chemicals D De Haast

ASAP 1179 Trd as Meago Services S Paulse

Moedi Consulting Engineers C Abrams

J&B Communication A Abbott

JS Medical & Surgical Suppliers H Williams

Panprop CC T/A Valudata AJ De Klerk

SMEC South Africa MN Phosa

BEA Productions (PTY)LTD EM Kock

Elektro Vroomen J Modise

Total Purchases

51. CONTINGENT LIABILITIES

51.1 Guarantees:

13,994 13,994

51.2 Court Proceedings:

51.2.1 High Court matters 71,879,474 83,646,475

8,450,684 5,470,372

51.2.3 Labour matters (SALGBC) 325,000 370,000

51.2.4 Magistrate court matters 147,456 107,457

80,802,613 89,594,304

51.3 Other liabilities:

52. CONTINGENT ASSETS

The municipality was not engaged in any transaction or event during the year under review involving Contingent Assets.

Principal Clerk Properties

Purchases for the

year

Nursing Sister

159,988

Admin assistant

42,033

Department of Education

Dr Kenneth Kaunda D Municipality 372,028

139,916

6,942,273

Working at IT

194,158

617,868

Municipal

- 29,375


It should be noted that new Councillors were not included in this note as they were elected after

year end.

Spouse is MEC in Mpumalanga

The municipality bought goods from the following companies, which are considered to be

Related Parties: all these were declared in the Municipal Bidding Documents.

Purchases for the

year


60,649

4,424,890

Various claims and litigation is in process.

Librarian

NERSA

142,568

150,746 Kimberley Hospital

51.3.2 Other cases: Various claims between employees and Council is in process.

199,203

All the above cases are being defended. The timing of any cash outflow is uncertain.

1,439,952 1,196,775

35,100

Various cases involving Council.

Various claims and litigation is in process.

522,062 688,315

9,582,670

51.2.2 Litigation and claims in process

The municipality pledged the following amounts as guarantee for employees' housing bonds:

51.3.1 Various cases: The municipality has implemented task grading system as a system of remuneration for all employees. However,

as at 30 June 2017, the implementation of task outcomes on employees revaluated were not finalised as yet. Management is certain that

this will result in a cash outflow which is unknown at the time of submitting the financials.

The validity of these bonds in terms of the original conditions at which they were issued could

not be verified with the respective banks. The banks have misplaced the guarantee documents

and have exonerated the municipality from such liability. For instances where bank confirmation

could not be obtained, a possible liability exists.

Various cases involving Council.

SAPS Roodepan 48,396 -

787,954

Capacity

238,201

69

53. IN-KIND DONATIONS AND ASSISTANCE

The municipality received no in-kind donations and assistance during the year under review.

54. COMPARISON WITH THE BUDGET

55. PRIVATE PUBLIC PARTNERSHIPS

56. EVENTS AFTER THE REPORTING DATE

57. COMPARATIVE FIGURES

58. DISCONTINUED OPERATIONS

No operations have been discontinued.

59. STANDARDS AND INTERPRETATIONS APPROVED NOT YET EFFECTIVE

GRAP 32 Service Concession arrangements: Grantor

GRAP 34 Separate Financial Statements

GRAP 35 Consolidated Financial Statements

GRAP 36 Investments in Associates and Joint Ventures

GRAP 37 Joint Arrangements

GRAP 38 Disclosure of interests in Other Entities

GRAP 108 Statutory receivables

GRAP 109 Accounting by Principals and Agents

GRAP 110 Living and Non-living Resources

Management has considered all the GRAP standards issued but not yet effective and in preliminary indications management anticipates

that the adoption of these standards will not have a significant impact on the financial position, financial performance or cash flows of the

municipality.

The comparative figures were restated as a result of the effect of Prior Period Errors (Note 39).

At the date of authorisation of these Annual Financial Statements the municipality has not applied the following GRAP standards that have

been approved, but are not yet effective:

Management have not identified any matter or circumstance (adjusting or non-adjusting) since the end of the financial year, that has

significantly affected, or may significantly affect, the operations, the results of those operations, or the state of affairs of the municipality in

future financial years.

Application of the above GRAP standards will be effective from a date to be announced by the Minister of Finance. This date is not

currently available.

The municipality was not a party to any Private Public Partnerships during the 2016/17 financial year.

The comparison of the municipality's actual financial performance against that budget, is set out in Appendices "E(1), E(2) and E(3)".



70

EXTERNAL LOANS Loan Redeemable Balance at Received Redeemed Balance at Carrying Other Costs

Number Date 30/06/16 during the written off 30/06/17 Value of in accordance

period during the Property, with the

period Plant & Equip MFMA

R R R R R R

LONG TERM LIABILITIES

ANNUITY LOANS 219,887,790

DBSA Loan @ 12% 10616 30-06-2017 864,007 864,007 -

DBSA Loan @ 10.91% 101452 31-12-2019 5,615,367 1,397,349 4,218,018

DBSA Loan @ 12.61% 102855/1 31-12-2028 15,545,480 559,934 14,985,546

DBSA Loan @ 6.75% 102855/3 31-12-2023 2,982,086 317,200 2,664,886

DBSA Loan @ 12.445% 103958/2 30-06-2031 201,869,382 5,065,030 196,804,352

Sub total DBSA 226,876,321 - 8,203,519 218,672,802

Total Annuity loans 226,876,321 - 8,203,519 218,672,802 219,887,790 -

TOTAL EXTERNAL LOANS 226,876,321 - 8,203,519 218,672,802 219,887,790 -

APPENDIX A

SOL PLAATJE LOCAL MUNICIPALITY: SCHEDULE OF EXTERNAL LOANS AS AT 30 JUNE 2017

71

Carrying

Opening Additions Work in Disposals/ Closing Opening Additions Disposals/ Closing Value

Balance Progress Impairment Opening Commissioned Closing Balance Balance Impairment Balance

Additions Balance Balance

Infrastructure

Electricity 297,310,303 11,144,132 262,117 28,375,932 28,375,932 - 308,716,551 94,934,080 6,763,497 (254,723) 101,442,855 207,273,697

Roads, Pavements and Storm water 453,978,217 24,979,785 (14,061) 22,488,244 2,283,496 45,184,533 478,943,942 145,251,532 13,033,647 (14,061) 158,271,118 320,672,824

Sewerage 423,594,594 16,560,143 (574,888) 173,582,626 173,582,626 - 439,579,850 61,923,910 6,599,659 178,464 68,702,033 370,877,817

Street Lights 21,804,448 1,483,919 1,483,919 - 21,804,448 9,732,969 9,732,969 12,071,480

Landfill Site 27,624,298 (1,603,551) 26,020,747 11,854,121 1,752,242 13,606,363 12,414,385

Landfill Site Improvements 9,906,458 13,086,367 9,906,458 9,906,458 - 22,992,825 0 - 22,992,825

Water 277,561,271 18,829,508 (231,600) 48,015,117 3,265,723 44,749,394 296,159,179 114,364,569 4,011,447 3,130,472 121,506,489 174,652,690

1,511,779,590 58,016,600 24,979,785 (558,432) 283,852,296 218,898,154 89,933,928 1,594,217,543 438,061,181 32,160,492 3,040,154 473,261,826 1,120,955,717

Community Assets

Owned Buildings 288,796,936 24,416,166 6,355,409 5,219,567 1,135,842 313,213,102 56,878,418 7,505,831 64,384,249 248,828,853

Land 54,930,438 - 54,930,438 - 54,930,438

343,727,374 24,416,166 - - 6,355,409 5,219,567 1,135,842 368,143,540 56,878,418 7,505,831 - 64,384,248.63 303,759,291

Heritage Assets

Heritage Assets 8,648,295 1,846,350 1,846,350 8,648,295 - 8,648,295

8,648,295 - - - 1,846,350 - 1,846,350 8,648,295 - - - - 8,648,295

Other Assets

Computer Equipment 16,072,337 2,761,633 (85,126) 18,748,844 8,915,830 2,317,310 11,233,140 7,515,704

Furniture and Equipment 21,046,217 769,007 21,815,224 14,943,764 1,680,676 16,624,440 5,190,784

Other Machinery and Equipment 13,296,797 1,115,941 14,412,738 8,269,786 1,505,438 9,775,223 4,637,515

Motor Vehicles 93,251,193 4,538,767 (386,963) 97,402,998 48,802,764 8,481,126 57,283,890 40,119,107

Assets Held for Sale 141,858 (141,858) - - -

143,808,402 9,185,349 - (613,946) - - - 152,379,804 80,932,144 13,984,550 - 94,916,694 57,463,110

Total 2,007,963,660 91,618,114 24,979,785 (1,172,378) 292,054,056 224,117,721 92,916,120 2,123,389,182 575,871,743 53,650,872 3,040,154 632,562,769 1,490,826,413

APPENDIX B

SOL PLAATJE LOCAL MUNICIPALITY : ANALYSIS OF PROPERTY PLANT AND EQUIPMENT AS AT 30 JUNE 2017

Accumulated Depreciation

Work in Progress (WIP)

Cost/Revaluation

72

Carrying

Directorate Opening Additions Work in Disposals Closing Opening Additions Disposals Closing Value

Balance Progress Opening Commissioned Closing Balance Balance Balance

Additions Balance Balance

Executive and Council 1,657,282 1,910,723 3,568,005 402,106 339,500 741,606 2,826,400

Municipal General 3,001,519 22,554 3,024,073 650,410 608,325 1,258,735 1,765,338

Municipal Manager 2,003,034 102,945 2,105,979 449,792 375,800 825,592 1,280,387

Corporate Services 32,643,849 4,082,959 36,726,808 4,923,644 3,970,458 8,894,102 27,832,706

Community Services 314,648,100 24,416,166 8,201,760 5,219,567 2,982,193 339,064,266 66,005,783 7,505,831 73,511,614 265,552,652

Financial Services 17,402,228 298,736 17,700,964 3,609,869 3,400,190 7,010,059 10,690,906

Strategic and Economic Development 37,345,642 503,593 37,849,235 6,144,652 4,729,776 10,874,428 26,974,806

Infrastructure and Services 1,599,262,006 60,280,439 24,979,785 (1,172,378) 283,852,296 218,898,154 89,933,927 1,683,349,852 493,685,486 32,720,992 3,040,154 529,446,632 1,153,903,219

TOTAL 2,007,963,660 91,618,114 24,979,785 (1,172,378) 292,054,056 224,117,721 92,916,120 2,123,389,182 575,871,743 53,650,872 3,040,154 632,562,769 1,490,826,413

Cost Accumulated Depreciation

Work in Progress (WIP)

APPENDIX C

SOL PLAATJE LOCAL MUNICIPALITY: SEGMENTAL ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT AS AT 30 JUNE 2017

73

2017 2017 2017 2017 2017 2017 2017 2017 2017

Original Adjustment Final Variance Explanation of variances greater than Actual Variance Variance Explanation of significant variances greater

Budget Budget Original vs 10% Original versus Final Budget Income & Actual vs Actual vs than 10% Actual versus Final Budget

Final Budget Expenditure Final Budget Final Budget

R R R % R R %

Income per directorate

– – – - -

324,037,302 68,670,828 392,708,130 21% Increases on: grant funding and interest received. 400,430,342 7,722,212 2%

2,119,698 – 2,119,698 0% - (2,119,698) -100% Income not realising.

Corporate Services 6,628,400 506 7,134,601 8% 5,357,565 (1,777,036) -25% Grant income not realising.

95,608,621 (3,911) 91,697,621 -4% 100,689,256 8,991,635 10% Income fines not realising.

Financial Services 501,836,261 (17,000) 484,836,261 -3% 472,722,629 (12,113,632) -2%

8,699,400 (700) 7,999,400 -8% 6,639,909 (1,359,491) -17% Income building plans not realising.

1,042,186,160 (25,000,000) 1,017,186,160 -2% 1,024,330,939 7,144,779 1%

Total 1,981,115,842 22,566,029 2,003,681,871 1% 2,010,170,639 6,488,768 0%

Expenditure per directorate

42,617,868 3,011,755 45,629,623 7% 43,421,647 (2,207,977) -5%

350,365,252 5,800,000 356,165,252 2% 273,935,883 (82,229,369) -23% As a result of actuarial gain.

21,055,703 2,000,000 23,055,703 9% 16,855,322 (6,200,381) -27% Saving on vacancies not filled.

Corporate Services 60,197,792 506,201 60,703,993 1% 54,008,097 (6,695,896) -11% Saving on vacancies not filled.

240,984,247 1,269,000 242,253,247 1% 234,279,950 (7,973,298) -3%

Financial Services 121,255,360 – 121,255,360 0% 106,378,965 (14,876,394) -12% Saving on vacancies not filled.

52,534,187 250,000 52,784,187 0% 50,824,479 (1,959,708) -4%

1,002,333,242 16,500,000 1,018,833,242 2% 975,492,172 (43,341,070) -4%

Total 1,891,343,651 29,336,956 1,920,680,607 2% 1,755,196,515 (165,484,092) -9% Due to the savings in general expenditure and

repairs and maintenance cost.

Surplus/(Deficit) 89,772,191 (6,770,927) 83,001,264 -8% Increase on grant funding for capital. 254,974,125 171,972,861 207% Due to the savings in expenditure .

Community Services

Strategic and Economic Development

Infrastructure and Services

Infrastructure and Services

Community Services

Executive and Council

Strategic and Economic Development

Executive and Council

Municipal General

Municipal Manager

APPENDIX D

SOL PLAATJE LOCAL MUNICIPALITY: SEGMENTAL STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED

30 JUNE 2017

Municipal General

Municipal Manager

74

2017 2017 2017 2017 2017 2017 2017 2017 2017

Actual Original Adjustment Final Variance Explanation of variances greater than Variance Variance Explanation of significant variances greater

Budget Budget Original vs 10% Original versus Final Budget Actual vs Actual vs than 10% Actual versus Final Budget

Final Budget Final Budget Final Budget

R R R R % R %

REVENUE

Property Rates 468,496,818 486,708,261 (17,000,000) 469,708,261 -3% (1,211,443) 0%

Service Charges 1,068,239,402 1,087,887,246 (25,000,000) 1,062,887,246 -2% 5,352,156 1%

Rental of Facilities and Equipment 10,024,738 10,690,000 - 10,690,000 0% (665,262) -6%

Interest Earned - External Investments 21,576,378 19,000,000 1,000,000 20,000,000 5% 1,576,378 8% Due to increase in interest rates.

Interest Earned - Outstanding Debtors 130,078,100 70,000,000 50,000,000 120,000,000 71% Due to increases in debtors and interest rate. 10,078,100 8% Due to increases in debtors and interest rate.

Fines 19,915,146 16,880,000 3,780,000 20,660,000 22% Due to GRAP implementation. (744,854) -4%

Licenses and Permits 2,801,133 3,270,000 - 3,270,000 0% (468,867) -14% Due to income not realising.

Income for Agency Services 6,975,018 6,280,000 (1,480,000) 4,800,000 -24% Budget adjusted to provide for loss of income. 2,175,018 45% Agency services extended to end of Financial year.

Government Grants and Subsidies 253,447,128 247,461,000 19,446,029 266,907,029 8% Due to capital projects being rolled over. (13,459,901) -5% Due to capital projects to be rolled over.

Public Contributions and Donations 0 - - - 0% - 0% Not budgeted.

Other Income 25,958,133 32,939,335 (8,180,000) 24,759,335 -25% Reallocations as result of mSCOA implementation. 1,198,798 5%

Gains on disposal of property, plant and equipment2,658,646 - - - 0% 2,658,646 0% Not budgeted.

Total Revenue 2,010,170,639 1,981,115,842 22,566,029 2,003,681,871 1% 6,488,768 0%

EXPENDITURE

Employee Related Costs 566,597,417 644,340,070 - 644,340,070 0% (77,742,653) -12% Due actuarial gain.

Remuneration of Councillors 25,011,009 23,312,308 2,631,755 25,944,063 11% Due to grading adjustment. (933,054) -4%

Impairment Losses 190,194,771 190,500,000 - 190,500,000 0% (305,229) 0%

Depreciation 58,707,853 55,650,000 4,967,000 60,617,000 9% (1,909,148) -3%

Finance Costs 27,789,438 27,757,073 33,000 27,790,073 0% (635) 0%

Bulk Purchases 491,966,152 506,500,000 6,000,000 512,500,000 1% (20,533,848) -4%

Contracted services 42,170,495 34,362,888 10,000,000 44,362,888 29% Reallocations as result of mSCOA implementation. (2,192,393) -5%

Grants and Subsidies Paid 46,933,287 61,510,000 1,080,000 62,590,000 2% (15,656,713) -25% Due to revision in policy and verification process of indigents.

General Expenses - Other 302,264,114 347,256,312 4,625,201 351,881,513 1% (49,617,399) -14% Due to savings.

Losses on Inventory 69,293 155,000 - 155,000 0% (85,707) -55% Due to savings.

Foreign Exchange Loss 183,750 - - - 0% 183,750 0% Due to devaluating of the Rand.

Total Expenditure 1,755,196,515 1,891,343,651 29,336,956 1,920,680,607 2% (165,484,092) -9% Due to the savings in general expenditure, employee costs

and repairs and maintenance cost.

NET SURPLUS FOR THE YEAR 254,974,125 89,772,191 (6,770,927) 83,001,264 -8% 171,972,861 207% Due to the savings in expenditure .

APPENDIX E(1)

SOL PLAATJE LOCAL MUNICIPALITY: ACTUAL VERSUS BUDGET (REVENUE AND EXPENDITURE) FOR THE YEAR ENDED 30 JUNE 2017

75

Directorate 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017

Actual Work in Total Original Adjustment Final Variance Explanation of variances greater than Variance Variance Explanation of significant variances greater

Additions Progress Additions Budget Budget Original vs 10% Original versus Final Budget Actual vs Actual vs than 10% Actual versus Final Budget

Additions Final Budget Final Budget Final Budget

R R R R R R % R %

Executive and Council 1,910,723 - 1,910,723 - - - 1,910,723 Loose equipment reallocation.

Municipal General 22,554 - 22,554 3,000,000 10,154,000 13,154,000 338% Loose equipment budget and additional projects. (13,131,446) -100% Project not realising.

Municipal Manager 102,945 - 102,945 - - - 102,945 Loose equipment reallocation.

Corporate Services 4,082,959 - 4,082,959 - - - 4,082,959 Loose equipment reallocation.

Community Services 24,416,166 - 24,416,166 9,894,000 (5,491,000) 4,403,000 -55% Budget reduced. 20,013,166 455% Landfill project budget moved to Infrastructure.

Financial Services 298,736 - 298,736 5,000,000 - 5,000,000 0% (4,701,264) -94% Intangible assets reallocated.

Strategic and Economic Development 503,593 - 503,593 13,732,000 18,531,000 32,263,000 135% Add additional projects and rolled over projects. (31,759,407) -98% Links project budget moved to Infrastructure.

Infrastructure and Services 60,280,439 24,979,785 85,260,224 93,578,000 493,839 94,071,839 1% (8,811,615) -9% Non qualifying assets expenditure and VAT income on grants

transferred to operational budget. Projects not being completed.

TOTAL 91,618,114 24,979,785 116,597,900 125,204,000 23,687,839 148,891,839 19% Add additional projects and rolled over projects. (32,293,939) -22% Non qualifying assets expenditure and VAT income on grants

transferred to operational budget. Projects not being completed.

APPENDIX E(2)

SOL PLAATJE LOCAL MUNICIPALITY: ACTUAL VERSUS BUDGET (ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT) FOR THE YEAR ENDED 30 JUNE 2017

76

2017 2017 2017 2017 2017 2017 2017 2017 2017

Actual Original Adjustment Final Variance Explanation of variances greater than Variance Variance Explanation of variances greater than

Budget Budget Original vs 10% Original versus Final Budget Actual vs Actual vs 10% Actual versus Final Budget

Final Budget Final Budget Final Budget

R R R R % R %

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from Ratepayers, Government and Other 1,456,464,064 1,727,821,000 (93,674,319) 1,634,146,681 -6% Due to adjusting income, grants and service charges. (177,682,617) -11% Due to increase of debtors

Cash paid to Suppliers and Employees 1,485,760,576 1,562,436,000 1,080,000 1,563,516,000 0% (77,755,424) -5% Saving on expenditure

Cash generated from / (utilised in) Operations (29,296,512) 165,385,000 (94,754,319) 70,630,681

Interest received 151,654,478 36,500,000 83,500,000 120,000,000 70% Due to increase in investments and interest on debtors. 31,654,478 26% Investment income increased above expectations.

Interest paid (27,789,438) (27,757,074) - (27,757,074) 0% (32,364) 0%

NET CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES 94,568,528 174,127,926 (11,254,319) 162,873,607


Purchase of Property, Plant and Equipment (116,597,900) (125,204,158) (24,660,681) (149,864,839) 16% Projects not completed before year end and new projects added. 33,266,939 -22% Projects not completed before year end.

Purchase of Intangible Assets (2,366,004) (2,366,004) Project re-categorised.

NET CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES (119,079,303) (125,204,158) (24,660,681) (149,864,839)


Loans repaid (8,203,519) (8,246,768) - (8,246,768) 0% 43,249 -1%

NET CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES (8,203,519) (8,246,768) - (8,246,768)

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (32,714,295) 40,677,000 (35,915,000) 4,762,000

Cash and Cash Equivalents at the beginning of the year 259,275,698 223,360,000 35,915,000 259,275,000

Cash and Cash Equivalents at the end of the year 226,561,404 264,037,000 - 264,037,000

APPENDIX E(3)

SOL PLAATJE LOCAL MUNICIPALITY: ACTUAL VERSUS BUDGET (CASH FLOW) FOR THE YEAR ENDED 30 JUNE 2017

77

Grants and Subsidies received for the year ended 30 June 2017

Total Receipts

for the Year

Total

Expenditure for

the Year

Delay \ withheld Gazette amount

Municipal year

Did the municipality

comply with the grant

conditions in terms of

grant framework in the

latest Division of Revenue Total Total Total Total Yes / No

Library Services Provincial 8,006,000 8,006,000 - 8,006,000 None Yes None

Primary Health Provincial - - - - No payment received. Debtor outstanding is R5 395 666. Yes None

EPWP Provincial 5,574,000 5,574,000 - 5,574,000 None Yes None

Miscellaneous Public 170,342 170,342 - N/A None Yes None

Equitable Share National 144,171,000 N/A - 144,171,000 None Yes None

ACIP National 3,000,000 3,000,000 - N/A None Yes None

Financial Management Grant National 1,625,000 1,625,000 - 1,625,000 None Yes None

MIG National 37,079,000 37,079,000 - 37,079,000 None Yes None

MSIG National 0 0 - 1,300,000 None Yes None

INEP National 7,400,000 7,400,000 - 7,400,000 None Yes None

ISDG (Skills) National 3,700,000 1,562,320 - 3,700,000 None Yes None

Frances Baard Municipality Municipality 7,815,794 7,815,794 - N/A None. N/A None

Coghsta Provincial - - - N/A None. Debtor outstanding is R34 880 068. Yes None

GURP Provincial 5,106,187 5,106,187 5,832,000 None. Debtor increased from R6 276 408 to R 11 382 594. Yes None

RBIG National 6,937,486 6,937,486 15,000,000 No payment received. Debtor outstanding is R6 937 485. Yes None

NDPG National 25,000,000 25,000,000 - 25,000,000 None Yes None

Total 243,541,136 109,276,128 12,043,672 254,687,000

APPENDIX F


DISCLOSURE OF GRANTS AND SUBSIDIES IN TERMS OF THE MUNICIPAL FINANCE MANAGEMENT ACT

The EPWP grant is a job creating grant to alleviate poverty and unemployment approved by National Government.

National and Provincial grants are spent in accordance with business plans approved by the various Government Departments.

Name of Grants Name of organ

of state or

municipal

entity

Reason for delay/ withholding of funds Reason for non-

compliance

78

Line Manager Motivation

1/2016/17 C- Pac & Pumps and Valves Repair and upgrading of Langleg Pump station, Riverton Resort Pump station, Riverton Villas Pump station 448,834 S Mkhize An Emergency

2/2016/17 C- Pac & Pumps and Valves Installation of high security fencing and provision of security services during construction period to protect and secure sites during construction 3,095,555 S Mkhize Exceptional cases

3/2016/17 Medi-clinic Payment to Medi clinic for service rendered in terms of injury on duty to Mr OT Mokale 145,123 WL Wiese Exceptional cases

4/2016/17 Lesae Trading Refurbish and upgrade RDP houses allocated to beneficiaries as part of Sol Plaatje 67 Minutes of doing good for Mandela 194,370 W Mabilo Exceptional cases

5/2016/17 Astra Travel Accommodation and transport for SAMSRA National Games 485,274 OK Mojanaga Exceptional cases

6/2016/17 Letlhabile Coaches Transportation of Councillors 60,000 S Isaacs Exceptional cases

7/2016/17 Hamba Nathi Accommodation & Transport for Councillors/councillor Induction Programme 329,590 S Isaacs Exceptional cases

8/2016/17 Astra Travel Accommodation for Councillors/councillor Induction Programme 104,690 S Isaacs Exceptional cases

9/2016/17 J& B Communications Purchase of standard management radios (with accessories x2) 250,606 NI Sinombe Sole Provider

10/2016/17 Macronym 37 Procurement of Gift/Memorabilia bags for newly appointed Councillors 53,921 N Poolo Exceptional cases

11/2016/17 Metsi –Chem International Repair and upgrading of chlorination system in Riverton WTW, Homevale WWTW and Ritchie 427,985 S Mkhize Sole Provider

12/2016/17 Rand Water Analytical Services Full analysis for domestic supply (SANS 0241) 70,110 S Mkhize Sole Provider

13/2016/17 Mettler Toledo Laboratory Equipment Supply and delivery of laboratory equipment 953,741 S Mkhize Sole Provider

14/2016/17 Marley Pipe Manufacture and supply 200 meters sn8 weholite and socketed 510,209 HF Harding An Emergency

15/2016/17 Astra Travel Transport and Accommodation for Choir Members travelling to Cape Town 168,995 OK Mojanaga Exceptional cases

16/2016/17 AAD Drivetrain Systems Pty Ltd Repair and fit Transmission 178,677 T Dreyer Sole Provider

17/2016/17 Astra Travel Accommodation for Councillor for SALGA National conference 32,775 G Mosimane Only Supplier to respond

18/2016/17 HV Test PTY LTD Urgent purchase of two pressure tester and repair and calibrate old pressure tester 280,154 NI Sinombi Sole Provider

19/2016/17 C-Pac Pumps and Valves (Additional work carries out at Roodepan Pump station as per quote: JV3260 29-08-2016) 726,772 S Mkhize An Emergency

20/2016/17 Lexis Nexis Road traffic/Transport subscription Sep 2016/17 Delivery & handling 33,540 CFM Langford Sole Provider

21/2016/17 AAD Drivetrain Systems Pty Ltd Repair & rebuild Transmission as per quote (Isuzu FVZ 1400) 115,742 T Dreyer Sole Provider

22/2016/17 Bentley Systems International Limited Micro station CAD program 16/06/2016-15/06/2017 9inv no: 47791139) 44,219 M Myburgh Sole Provider

23/2016/17 C-Pac Pumps and Valves Supply and install as per quote (emergency repair work done at gogga pump station) 40,480 HF Harding An Emergency

23/2016/17 C-Pac Pumps and Valves Supply and install as per quote (emergency repair work done at gogga pump station) 40,480 HF Harding An Emergency

24/2016/17 Astra Travel Car hire for Executive Mayor 32,480 GT Mosimane Exceptional cases

25/2016/17 Babcock Equipment Repair oil leak on drive train- replace bearings & seals on Tanderms of Motor grader (VolvoG940, Motor grader)- Fleet no: R131 (CGS175NC) 192,058 AC Samson Sole Provider

26/2016/17 Nosa PTY (LTD) Preliminary incident investigation course 55,600 R Coertze Sole Provider

27/2016/17 Super Armature Winding Repairs to HLP 8 motor at Riverton water treatment plant (A.P.Q) 156,868 CB Marsh Exceptional cases

28/2016/17 Astra travel Accommodation and Transport for Sol Plaatje Employees in Rustenburg for the SAMSRA Regional, Provincial and National games 240,573 OK Mojanaga Exceptional cases

29/2016/17 Bell Equipment Supply & fit new engine to Bomag BC572RB Landfill machine as per attached estimate (3000050784), dated 01/02/2017. Serial number is BRC71002 580,866 AC Samson Sole Provider

30/2016/17 First Technology Supply, Delivery and installation of Enterprise storage for Solar Migration 362,407 V Monyobo Exceptional cases

31/2016/17 Tagtron Solutions repair of the tattle tape system at the Galeshewe Library 51,455 FH Van Dyk Sole Provider

32/2016/17 South African Post Office Purchase of Prepaid Envelopes (Pro ENVS S/W) 36,860 CFM Langford Sole Provider

33/2016/17 G4S Protection and visible security services for various Sol Plaatje Municipality satellite offices housing cashiers and cash facilities (Revenue Management) 261,924 B Booth /Adv. A Klopper An Emergency

34/2016/17 Huber Technology (Pty)Ltd Repair & Service Huber Rotomat fine screen 91,515 M Arthur Sole Provider

35/2016/17 Aerzen Airgas Compressors Repairs on effluent at Homevale Waste Water Treatment plant 310,668 M Arthur An Emergency

36/2016/17 Bearing Man (Pty)Ltd Repairs on High lift pump 10 97,375 H Harding An Emergency

37/2016/17 SAW Africa Repairs on 1000kw Motor of High lift pump 8 72,145 H Harding An Emergency

38/2016/17 Tshiya Infrastructure Development Clearing of Erf 5025 Phase 1-colville for relocation of Santa Centre community 1,274,520 TL Raseobi Exceptional cases

39/2016/17 Cancelled

40/2016/17 Aganang Consulting Eng &Jonroy Design Architects Professional services for the Sol Plaatje Municipality Inspectorate per month 116,736 N Modiba Exceptional cases

41/2016/17 Magnis Trucks Bloemfontein Repairs to UD330 sewage tanker, replace snifting valve, moisture separator, vacuum & control valves and service broom exhauster 192,569 AC Samson Sole Provider

42/2016/17 Travel Dot Com Accommodation for 12 chairpersons of the portfolio committee in Upington 61,659 GT Mosimane Exceptional cases

43/2016/17 Johannesburg Mining Supplies Service and repairs of jaws of life 82,893 MW Pretorius An Emergency

44/2016/17 Huber Technology Supply and fit contactors, aux block, sensors, switches, basket bars, rakes and bottom flight 154,766 M Arthur Sole Provider

45/2016/17 Ronre Electrical Enterprise Supply, Delivery and commissioning of injection Equipment at hall street substation 2,359,004 N Sinombe Sole Provider

46/2016/17 Zulko Tours & Travel The Mayor and some Councillors attended the SA National Aids Conference in Durban, numerous requests were made to suppliers and only one supplier responded 70,910 GT Mosimane Exceptional cases

47/2016/17 Zulko Tours & Travel The Mayor and some Councillors attended the SA National Aids Conference in Durban, numerous requests were made to suppliers and only one supplier responded 32,435 GT Mosimane Exceptional cases

48/2016/17 BJB Toilet Hire & Septic Tanks Provision of temporary sanitation (chemical portable toilet) for various informal settlement 53,940 M Selesho Exceptional cases

Service Rendered / Product Purchased Financial

Implications

DocNo.

APPENDIX G

SOL PLAATJE LOCAL MUNICIPALITY: DISCLOSURES OF DEVIATIONS FROM PROCUREMENT POLICY


Service Provider

79

NC091 Sol Plaatje - Reconciliation of Table A1 Budget Summary

Description

R thousands

Original Budget Budget

Adjustments

(i.t.o. MFMA s28 )

Final

adjustments

budget

Actual

Outcome

Unauthorised

expenditure

Variance Actual Outcome

as % of Final

Budget

Actual Outcome

as % of Original

Budget

Reported

unauthorised

expenditure

Expenditure

authorised in terms

of section 32 of

MFMA

Balance to be

recovered

Restated Audited

Outcome

1 2 3 4 5 6 7 8 9 10 11 12

Financial Performance

Property rates 486,708 (17,000) 469,708 468,497 (1,211) 99.7% 96.3% 484,397

Service charges 1,087,887 (25,000) 1,062,887 1,068,239 5,352 100.5% 98.2% 1,004,895

Investment revenue 19,000 1,000 20,000 21,576 1,576 107.9% 113.6% 20,996

Transfers recognised - operational 165,897 2,713 168,610 163,924 (4,685) 97.2% 98.8% 164,215

Other own revenue 140,059 44,120 184,179 198,411 14,232 107.7% 141.7% 163,742

Total Revenue (excluding capital transfers and contributions) 1,899,552 5,833 1,905,385 1,920,648 15,263 100.8% 101.1% 1,838,245

Employee costs 644,340 – 644,340 566,597 – (77,743) 87.9% 87.9% – – – 602,966

Remuneration of councillors 23,312 2,632 25,944 25,011 – (933) 96.4% 107.3% – – – 20,948

Debt impairment 190,500 – 190,500 190,195 – (305) 99.8% 99.8% – – – 159,613

Depreciation & asset impairment 55,650 4,967 60,617 58,708 – (1,909) 96.9% 105.5% – – – 57,792

Finance charges 27,757 33 27,790 27,789 – (1) 100.0% 100.1% – – – 29,018

Materials and bulk purchases 647,408 8,070 655,478 613,714 – (41,764) 93.6% 94.8% – – – 587,694

Transfers and grants 61,510 1,080 62,590 46,933 – (15,657) 75.0% 76.3% – – – 39,321

Other expenditure 240,866 12,555 253,421 226,249 – (27,173) 89.3% 93.9% – – 217,007

Total Expenditure 1,891,344 29,337 1,920,681 1,755,197 – (165,484) 91.4% 92.8% – – – 1,714,360

Surplus/(Deficit) 8,208 (23,504) (15,296) 165,451 180,748 -1081.7% 2015.8% 123,885

Transfers recognised - capital 81,564 16,733 98,297 89,523 (8,774) 91.1% 109.8% 111,728

Contributions recognised - capital & contributed assets – – – – – 261

Surplus/(Deficit) after capital transfers & contributions 89,772 (6,771) 83,001 254,974 171,973 307.2% 284.0% 235,873

Share of surplus/ (deficit) of associate – – – – – - - –

Surplus/(Deficit) for the year 89,772 (6,771) 83,001 254,974 171,973 307.2% 284.0% 235,873

Capital expenditure & funds sources

Capital expenditure 125,204 1,525 148,892 119,079 (29,813) 80.0% 95.1% 151,651


Public contributions & donations – – – – – - - –

Borrowing – – – – – - - –

Internally generated funds 43,640 6,955 50,595 29,556 (21,039) 58.4% 67.7% 39,922

Total sources of capital funds 125,204 23,688 148,892 119,079 (29,813) 80.0% 95.1% 151,651

Cash flows

Net cash from (used) operating 174,128 (14,796) 159,332 94,569 (64,763) 59.4% 54.3% 146,293

Net cash from (used) investing (125,204) (23,688) (148,892) (119,079) 29,813 80.0% 95.1% (151,651)

Net cash from (used) financing (8,246) – (8,246) (8,204) 42 99.5% 99.5% (10,824)

Cash/cash equivalents at the year end 264,037 – 261,470 226,561 (34,908) 86.6% 85.8% 259,276

2016/17 2015/16

APPENDIX H


APPROPRIATION STATEMENT FOR THE ENDED 30 JUNE 2017

80

NC091 Sol Plaatje - Reconciliation of Table A2 Budgeted Financial Performance (revenue and expenditure by standard classification)

Description

R thousand


Adjustments

(i.t.o. MFMA s28)

Final

adjustments

budget

Actual

Outcome

Unauthorised

expenditure

Variance of

Actual Outcome

against

Adjustments

Budget

Actual Outcome

as % of Final

Budget

Actual Outcome

as % of Original

Budget

Reported

unauthorised

expenditure

Expenditure

authorised in

terms of section

32 of MFMA

Balance to be

recovered

Restated

Audited

Outcome

1 2 3 4 5 6 7 8 9 10 11 12

Revenue - Standard

Governance and administration 834,892 52,847 887,739 878,831 (8,907) 99.0% 105.3% 895,009

Executive and council 326,157 70,233 396,390 400,430 4,040 101.0% 122.8% 395,258

Budget and treasury office 501,836 (17,892) 483,944 472,723 (11,222) 97.7% 94.2% 496,684

Corporate services 6,898 506 7,405 5,678 (1,726) 76.7% 82.3% 3,067

Community and public safety 39,092 (3,101) 35,991 44,026 8,036 122.3% 112.6% 33,236

Community and social services 23,103 (1,901) 21,202 30,855 9,653 145.5% 133.6% 20,038

Sport and recreation 5,933 (1,200) 4,733 3,276 (1,457) 69.2% 55.2% 3,565

Public safety 240 – 240 128 (112) 53.5% 53.5% 74

Housing 9,801 – 9,801 9,692 (109) 98.9% 98.9% 9,529

Health 15 – 15 75 60 499.5% 499.5% 30

Economic and environmental services 12,936 (1,480) 11,456 12,934 1,478 112.9% 100.0% 11,754

Planning and development 3,420 – 3,420 2,575 (845) 75.3% 75.3% 2,722

Road transport 9,516 (1,480) 8,036 10,359 2,323 128.9% 108.9% 9,032

Environmental protection – – – – - -

Trading services 1,089,187 (25,000) 1,064,187 1,070,634 6,447 100.6% 98.3% 1,006,131

Electricity 700,551 (25,000) 675,551 672,725 (2,826) 99.6% 96.0% 645,804

Water 255,384 – 255,384 265,101 9,717 103.8% 103.8% 233,489

Waste water management 76,450 – 76,450 76,377 (73) 99.9% 99.9% 72,841

Waste management 56,803 – 56,803 56,432 (371) 99.3% 99.3% 53,997

Other 5,009 (700) 4,309 3,744 (565) 86.9% 74.7% 4,103

Total Revenue - Standard 1,981,116 22,566 2,003,682 2,010,171 6,489 100.3% 101.5% 1,950,233

Expenditure - Standard

Governance and administration 597,627 11,318 608,945 496,669 – (112,276) 81.6% 83.1% – – – 543,232

Executive and council 414,039 10,812 424,851 334,122 (90,729) 78.6% 80.7% – 381,821

Budget and treasury office 110,427 – 110,427 96,601 (13,826) 87.5% 87.5% – 92,886

Corporate services 73,161 506 73,668 65,946 (7,722) 89.5% 90.1% – 68,524

Community and public safety 221,370 1,269 222,639 212,315 – (10,325) 95.4% 95.9% – – – 207,941

Community and social services 77,037 1,269 78,306 72,794 (5,512) 93.0% 94.5% – 70,201

Sport and recreation 50,679 – 50,679 49,902 (777) 98.5% 98.5% – 47,017

Public safety 53,832 – 53,832 49,754 (4,078) 92.4% 92.4% – 45,279

Housing 23,196 – 23,196 22,004 (1,191) 94.9% 94.9% – 24,394

Health 16,627 – 16,627 17,860 1,233 107.4% 107.4% – 21,050

Economic and environmental services 113,056 1,550 114,606 99,076 – (15,530) 86.4% 87.6% – – – 96,638

Planning and development 39,450 250 39,700 39,105 (595) 98.5% 99.1% – 37,852

Road transport 73,606 1,300 74,906 59,972 (14,935) 80.1% 81.5% – 58,786

Environmental protection – – – – - - –

Trading services 948,341 15,200 963,541 937,486 – (26,055) 97.3% 98.9% – – – 857,762

Electricity 622,243 9,400 631,643 616,726 (14,917) 97.6% 99.1% – 558,289

Water 209,194 (900) 208,294 195,340 (12,954) 93.8% 93.4% – 189,422

Waste water management 63,501 6,700 70,201 71,784 1,583 102.3% 113.0% – 62,977

Waste management 53,403 – 53,403 53,636 233 100.4% 100.4% – 47,075

Other 10,949 – 10,949 9,651 (1,298) 88.1% 88.1% – 8,787

Total Expenditure - Standard 1,891,344 29,337 1,920,681 1,755,197 – (165,484) 91.4% 92.8% – – – 1,714,360

Surplus/(Deficit) for the year 89,772 (6,771) 83,001 254,974 – 171,973 307.2% 284.0% – – – 235,873

2016/17 2015/16

81

NC091 Sol Plaatje - Reconciliation of Table A3 Budgeted Financial Performance (revenue and expenditure by municipal vote)

Vote Description

R thousand


Adjustments

(i.t.o. MFMA s28)

Final

adjustments

budget

Actual

Outcome

Unauthorised

expenditure

Variance of

Actual Outcome

against

Adjustments

Budget

Actual Outcome

as % of Final

Budget

Actual Outcome

as % of Original

Budget

Reported

unauthorised

expenditure

Expenditure

authorised in

terms of section

32 of MFMA

Balance to be

recovered

Restated

Audited

Outcome

1 2 3 4 5 6 7 8 9 10 11 12

Revenue by Vote

Vote 1 - EXECUTIVE AND COUNCIL – – – – – –

Vote 2 - MUNICIPAL AND GENERAL 324,037 70,233 394,270 400,430 6,160 101.6% 123.6% 395,258

Vote 3 - MUNICIPAL MANAGER 2,120 – 2,120 – (2,120) - - –

Vote 4 - CORPORATE SERVICES 6,628 506 7,135 5,358 (1,777) 75.1% 80.8% 2,706

Vote 5 - COMMUNITY SERVICES 95,609 (4,581) 91,028 100,689 9,662 110.6% 105.3% 86,704

Vote 6 - FINANCIAL SERVICES 501,836 (17,892) 483,944 472,723 (11,222) 97.7% 94.2% 496,684

Vote 7 - STRATEGY ECON DEVELOPMENT AND PLANNING 8,699 (700) 7,999 6,640 (1,359) 83.0% 76.3% 7,185

Vote 8 - INFRASTRUCTURE AND SERVICES 1,042,186 (25,000) 1,017,186 1,024,331 7,145 100.7% 98.3% 961,695

Total Revenue by Vote 1,981,116 22,566 2,003,682 2,010,171 6,489 100.3% 101.5% 1,950,233

Expenditure by Vote to be appropriated

Vote 1 - EXECUTIVE AND COUNCIL 42,618 3,012 45,630 43,422 (2,208) 95.2% 101.9% – 40,167

Vote 2 - MUNICIPAL AND GENERAL 350,365 5,800 356,165 273,845 (82,320) 76.9% 78.2% – 324,370

Vote 3 - MUNICIPAL MANAGER 21,056 2,000 23,056 16,855 (6,200) 73.1% 80.1% – 17,284

Vote 4 - CORPORATE SERVICES 60,198 506 60,704 54,008 (6,696) 89.0% 89.7% – 56,226

Vote 5 - COMMUNITY SERVICES 240,984 1,269 242,253 234,280 (7,973) 96.7% 97.2% – 222,404

Vote 6 - FINANCIAL SERVICES 121,255 – 121,255 106,470 (14,785) 87.8% 87.8% – 103,287

Vote 7 - STRATEGY ECON DEVELOPMENT AND PLANNING 52,534 250 52,784 50,824 (1,960) 96.3% 96.7% – 48,537

Vote 8 - INFRASTRUCTURE AND SERVICES 1,002,333 16,500 1,018,833 975,492 (43,341) 95.7% 97.3% – 902,085

Total Expenditure by Vote 1,891,344 29,337 1,920,681 1,755,197 – (165,484) 91.4% 92.8% – – – 1,714,360


2016/17 2015/16

82

NC091 Sol Plaatje - Reconciliation of Table A4 Budgeted Financial Performance (revenue and expenditure)

Description

R thousand


Adjustments

(i.t.o. MFMA s28)

Final

adjustments

budget

Actual

Outcome

Unauthorised

expenditure


as % of Final

Budget

Actual Outcome

as % of Original

Budget

Reported

unauthorised

expenditure

Expenditure

authorised in

terms of section

32 of MFMA

Balance to be

recovered

Restated

Audited

Outcome

1 2 3 4 5 6 7 8 9 10 11 12

Revenue By Source

Property rates 486,708 (17,000) 469,708 468,497 (1,211) 99.7% 96.3% 484,397

Property rates - penalties & collection charges – – - -

Service charges - electricity revenue 700,551 (25,000) 675,551 672,725 (2,826) 99.6% 96.0% 645,804

Service charges - water revenue 255,104 – 255,104 263,684 8,580 103.4% 103.4% 233,270

Service charges - sanitation revenue 75,450 – 75,450 75,409 (41) 99.9% 99.9% 71,845

Service charges - refuse revenue 56,783 – 56,783 56,422 (361) 99.4% 99.4% 53,975

Service charges - other – – - -

Rental of facilities and equipment 10,690 – 10,690 10,025 (665) 93.8% 93.8% 9,839

Interest earned - external investments 19,000 1,000 20,000 21,576 1,576 107.9% 113.6% 20,996

Interest earned - outstanding debtors 70,000 50,000 120,000 130,078 10,078 108.4% 185.8% 101,387

Dividends received – – - -

Fines 16,880 3,780 20,660 19,915 (745) 96.4% 118.0% 17,407

Licences and permits 3,270 – 3,270 2,801 (469) 85.7% 85.7% 2,851

Agency services 6,280 (1,480) 4,800 6,975 2,175 145.3% 111.1% 6,486

Transfers recognised - operational 165,897 2,713 168,610 163,924 (4,685) 97.2% 98.8% 164,215

Other revenue 32,939 (8,180) 24,759 25,958 1,199 104.8% 78.8% 23,987

Gains on disposal of PPE – 2,659 2,659 1,786

Total Revenue (excluding capital transfers and

contributions)

1,899,552 5,833 1,905,385 1,920,648 15,263 100.8% 101.1% 1,838,245

- -

Expenditure By Type – - -

Employee related costs 644,340 – 644,340 566,597 (77,743) 87.9% 87.9% – 602,966

Remuneration of councillors 23,312 2,632 25,944 25,011 (933) 96.4% 107.3% – 20,948

Debt impairment 190,500 – 190,500 190,195 (305) 99.8% 99.8% – 159,613

Depreciation & asset impairment 55,650 4,967 60,617 58,708 (1,909) 96.9% 105.5% – 57,792

Finance charges 27,757 33 27,790 27,789 (1) 100.0% 100.1% – 29,018

Bulk purchases 506,500 6,000 512,500 491,966 (20,534) 96.0% 97.1% – 454,010

Other materials 140,908 2,070 142,978 121,748 (21,230) 85.2% 86.4% – 133,684

Contracted services 34,363 10,000 44,363 42,170 (2,192) 95.1% 122.7% – 31,332

Transfers and grants 61,510 1,080 62,590 46,933 (15,657) 75.0% 76.3% – 39,321

Other expenditure 206,503 2,555 209,059 180,586 (28,473) 86.4% 87.4% – 185,266

Loss on disposal of PPE – 3,493 3,493 #DIV/0! #DIV/0! – 409

Total Expenditure 1,891,344 29,337 1,920,681 1,755,197 – (165,484) 91.4% 92.8% – – – 1,714,360 - -

Surplus/(Deficit) 8,208 (23,504) (15,296) 165,451 180,748 -1081.7% 2015.8% 123,885


Contributions recognised - capital – –

Contributed assets – – - - 261

Surplus/(Deficit) after capital transfers &

contributions

89,772 (6,771) 83,001 254,974 171,973 307.2% 284.0% 235,873

Taxation – – - -

Surplus/(Deficit) after taxation 89,772 (6,771) 83,001 254,974 171,973 307.2% 284.0% 235,873

Attributable to minorities – – - -

Surplus/(Deficit) attributable to municipality 89,772 (6,771) 83,001 254,974 171,973 307.2% 284.0% 235,873

Share of surplus/ (deficit) of associate – – - -


2016/17 2015/16

83

NC091 Sol Plaatje - Reconciliation of Table A5 Budgeted Capital Expenditure by vote, standard classification and funding

Vote Description

R thousand

Original Budget Total Budget

Adjustments

(i.t.o. MFMA s28)

Final

adjustments

budget

Actual

Outcome

Unauthorised

expenditure


as % of Final

Budget

Actual Outcome

as % of Original

Budget

Reported

unauthorised

expenditure

Expenditure

authorised in

terms of section

32 of MFMA

Balance to be

recovered

Restated

Audited

Outcome

1 2 3 4 5 6 7 8 9 10 11 12

Capital expenditure - Vote

Multi-year expenditure

Vote 1 - EXECUTIVE AND COUNCIL – – – – - - – –

Vote 2 - MUNICIPAL AND GENERAL – – – – - - – –

Vote 3 - MUNICIPAL MANAGER – – – – - - – –

Vote 4 - CORPORATE SERVICES – – – – - - – –

Vote 5 - COMMUNITY SERVICES 9,894 – 4,403 3,002 (1,401) 68% 30% – –

Vote 6 - FINANCIAL SERVICES – – – – - - – –

Vote 7 - STRATEGY ECON DEVELOPMENT AND PLANNING 7,900 – 25,400 20,759 (4,641) 82% 263% – –

Vote 8 - INFRASTRUCTURE AND SERVICES 89,578 (10,473) 79,105 37,767 (41,339) 48% 42% – 67,571

Capital multi-year expenditure 107,372 (10,473) 108,908 61,528 – (47,380) 56% 57% – – – 67,571 – - - –

Single-year expenditure

Vote 1 - EXECUTIVE AND COUNCIL 3,000 – 13,154 (13,154) – –

Vote 2 - MUNICIPAL AND GENERAL – – – – – –

Vote 3 - MUNICIPAL MANAGER – – – – – –

Vote 4 - CORPORATE SERVICES – – – – – –

Vote 5 - COMMUNITY SERVICES – – – 10,122 10,122 #DIV/0! #DIV/0! – 6,958

Vote 6 - FINANCIAL SERVICES 5,000 – 5,000 2,307 (2,693) 46% 46% – 3,767

Vote 7 - STRATEGY ECON DEVELOPMENT AND PLANNING 5,832 1,031 6,863 7,120 257 104% 122% – 21,307

Vote 8 - INFRASTRUCTURE AND SERVICES 4,000 10,967 14,967 38,003 23,036 254% 950% – 52,048

Capital single-year expenditure 17,832 11,998 39,984 57,552 – 17,568 144% 323% – – – 84,080

Total Capital Expenditure - Vote 125,204 1,525 148,892 119,079 – (29,813) 80% 95% – – – 151,651 - -

Capital Expenditure - Standard

Governance and administration 8,000 10,154 18,154 6,418 – (11,736) 35% 80% – – – 3,767

Executive and council 3,000 10,154 13,154 2,036 (11,117) –

Budget and treasury office 5,000 – 5,000 4,382 (618) 88% 88% – 3,767

Corporate services – –

Community and public safety 10,294 (5,843) 4,803 24,416 – 19,613 508% 237% – – – 6,958

Community and social services 9,894 (5,843) 4,051 24,416 20,366 603% 247% – 6,951

Sport and recreation 400 752 (752) - - –

Public safety – - - – 7

Housing – - - –

Health – - - –

Economic and environmental services 17,051 20,408 37,459 24,980 – (12,479) 67% 147% – – – 21,266

Planning and development – – - - – 4,650

Road transport 17,051 20,408 37,459 24,980 (12,479) 67% – 16,616

Environmental protection – - - –

Trading services 77,959 (3,261) 74,698 58,017 – (16,682) 78% 74% – – – 119,659

Electricity 12,900 – 12,900 11,144 (1,756) 86% 86% – 26,760

Water 41,730 (9,000) 32,730 18,830 (13,900) 58% 45% – 42,909

Waste water management 5,800 11,120 16,920 16,560 (360) 98% 286% – 49,991

Waste management 17,530 (5,381) 12,148 11,483 (666) –

Other 11,900 1,878 13,778 5,249 (8,529) 38% 44% – –

Total Capital Expenditure - Standard 125,204 23,336 148,892 119,079 – (29,813) 80% 95% – – – 151,651 - -

Funded by:

National Government 75,732 (973) 74,759 79,416 4,657 106% 105% 94,188

Provincial Government 5,832 11,154 16,986 5,106 (11,879) 30% 88% 12,122

District Municipality 5,000 5,000 5,000 – 100% 5,419

Other transfers and grants 1,552 1,552 (1,552) - -

Transfers recognised - capital 81,564 16,733 98,297 89,523 (8,774) 91% 110% 111,728

Public contributions & donations – - -

Borrowing – - -

Internally generated funds 43,640 6,955 50,595 29,556 (21,039) 58% 68% 39,922

Total Capital Funding 125,204 23,688 148,892 119,079 (29,813) 80% 95% 151,651

2016/17 2015/16

84

Please select from list - Reconciliation of Table A7 Budgeted Cash Flows

Description 2015/16

R thousand


Adjustments

(i.t.o. s28)

Final

adjustments

budget

Actual

Outcome


as % of Final

Budget

Actual Outcome

as % of Original

Budget

Restated

Audited

Outcome

1 2 3 4 5 6 7 8

CASH FLOW FROM OPERATING ACTIVITIES

Receipts

Property rates, peanalties and collection charges 447,772 (51,601) 396,171 347,392 (48,779) 87.7% 77.6% 314,616

Service charges 970,969 (66,615) 904,354 789,950 (114,403) 87.3% 81.4% 813,381

Other revenue 61,619 2,560 64,179 65,674 1,495 102.3% 106.6% 60,199

Government - operating 165,897 2,713 168,610 163,924 (4,685) 97.2% 98.8% 164,215

Government - capital 81,564 16,733 98,297 89,523 (8,774) 91.1% 109.8% 111,728

Interest 36,500 83,500 120,000 151,654 31,654 126.4% 415.5% 122,383

Dividends – – – – - -

Payments

Suppliers and employees (1,555,926) (973) (1,556,899) (1,477,777) 79,123 94.9% 95.0% (1,404,584)

Finance charges (27,757) (33) (27,790) (27,789) 1 100.0% 100.1% (29,018)

Transfers and Grants (6,510) (1,080) (7,590) (7,984) (394) 105.2% 122.6% (6,625)

NET CASH FROM/(USED) OPERATING ACTIVITIES 174,128 (14,796) 159,332 94,569 (64,763) 59.4% 54.3% 146,293


Receipts

Proceeds on disposal of PPE – – - -

Decrease (Increase) in non-current debtors – – - -

Decrease (increase) other non-current receivables – – - -

Decrease (increase) in non-current investments – – - -

Payments

Capital assets (125,204) (23,688) (148,892) (119,079) 29,813 80.0% 95.1% (151,651)

NET CASH FROM/(USED) INVESTING ACTIVITIES (125,204) (23,688) (148,892) (119,079) 29,813 80.0% 95.1% (151,651) - -


Receipts

Short term loans – – - -

Borrowing long term/refinancing – – - -

Increase (decrease) in consumer deposits – – – - -

Payments

Repayment of borrowing (8,246) – (8,246) (8,204) 42 99.5% 99.5% (10,824)

NET CASH FROM/(USED) FINANCING ACTIVITIES (8,246) – (8,246) (8,204) 42 99.5% 99.5% (10,824)

NET INCREASE/ (DECREASE) IN CASH HELD 40,678 (38,484) 2,194 (32,714) (16,182)

Cash/cash equivalents at the year begin: 223,360 259,276 259,276 275,457

Cash/cash equivalents at the year end: 264,037 261,470 226,561 (34,908) 86.6% 85.8% 259,276

2016/17

85